Insert from Craig's latest Research.
California dreaming
Reuters
ATM.NZ
Bloomberg
ATM NZ
Ticker Exchange
ATM NZC
4.53 5.76
ATM can help solve infant formula shortage in the US
The infant formula shortage in the US is now at an acute level, with stock outs hitting 74% across the US as of late May. In an effort to increase supply, the FDA has temporarily relaxed its approvals process. Our understanding is that ATM filed an application with the FDA to sell into the US in late May, but is yet to receive a response. Unlike Bubs and Kendamil, the two international brands which have already been granted temporary approval by the FDA to sell their formula into the US, ATM did not have an FDA application in train prior to the current crisis and is not first cab off the rank. However, we think ATM is well positioned to be approved in coming weeks, given it already has a wide distribution network of c.27k stores in the US for its Fresh Milk product which it could use to speed distribution of its Infant Formula products onto shelves.
US a difficult market
While we see potential for ATM to benefit at the margins from the current shortage (adding c.$6-9m to EBIT over FY22/FY23), the real question is whether ATM can leverage this to establish itself in the US market in the long run. If ATM could capture 2% of the US market at 15% EBIT margin, this would add c.28cps (c.5%) to our valuation. There are however good structural reasons why ATM has not previously attempted to enter the US market. Namely, the US IF market is smaller and much more concentrated than China's, has structurally lower margins, as well as trade barriers in the form of high tariffs and the onerous FDA approval process. As a result, imports accounted for only 1.5% of all US infant formula sales in 2021. For ATM to create a viable infant formula business in the US requires, as first steps, that (1) the FDA approves ATM's IF products for sale on a long term basis and (2) the US needs to axe tariffs applied to IF imports. As yet, there are no signs that this will happen. Inside this note we do a deep dive on the US market.
Secondary benefits in China
The most material impact to ATM's revenue and earnings in the near term may well be in China, with our data suggesting Abbott's sales have collapsed 48% YTD. Abbott's market share was however modest to start with at c.2%, suggesting perhaps c.1-2% upside to ATM's sales.
Retain Neutral, TP -7%
We leave our estimates unchanged (pending greater clarity), but TP reduces 7% to $5.76 to reflect increased RFR since our last update. Retain Neutral.
I hate speculating about takeovers on any company but A2 has all the ingredients to look very attractive, great products, great branding, a very dominant market position and best of all for T/O targets, IMO, a management team that is floundering which has helped the SP tumble with little recovery.......given how big some of the world dairy company players are and their own interest in entering the A2 milk market me thinks this one looks likely to attract a T/O
Quote from: snapiti on Jun 25, 2022, 01:25 PMI hate speculating about takeovers on any company but A2 has all the ingredients to look very attractive, great products, great branding, a very dominant market position and best of all for T/O targets, IMO, a management team that is floundering which has helped the SP tumble with little recovery.......given how big some of the world dairy company players are and their own interest in entering the A2 milk market me thinks this one looks likely to attract a T/O
Do you think there is any possibility of a takeover while there are three class action lawsuits in progress?
Seems those would be a big negative for any potential suitor
Bellermys get FDA approval. When will ATM get there's .
https://www.fda.gov/news-events/press-announcements/fda-infant-formula-update-june-27-2022
Quote from: Shareguy on Jun 28, 2022, 07:14 AMBellermys get FDA approval. When will ATM get there's .
A long time after everyone else.
Quote from: Raven on Jun 28, 2022, 07:50 AMQuote from: Shareguy on Jun 28, 2022, 07:14 AMBellermys get FDA approval. When will ATM get there's .
A long time after everyone else.
And what does that tell you? Inept management?
Quote from: kasper on Jun 28, 2022, 09:45 AMQuote from: Raven on Jun 28, 2022, 07:50 AMQuote from: Shareguy on Jun 28, 2022, 07:14 AMBellermys get FDA approval. When will ATM get there's .
A long time after everyone else.
And what does that tell you? Inept management?
I don't think can read too much into it (at this stage) - going through US FDA bureaucracy wouldn't be much fun. Likely Bellamys were earlier in the queue, or the Australians might have been more on to it, and got in their first.
Where is Fonterra and their approvals?
Quote from: kasper on Jun 28, 2022, 09:45 AMQuote from: Raven on Jun 28, 2022, 07:50 AMQuote from: Shareguy on Jun 28, 2022, 07:14 AMBellermys get FDA approval. When will ATM get there's .
A long time after everyone else.
And what does that tell you? Inept management?
Government help. Jacinda went to Washington on a trade mission and came back with absolutely nothing. Fonterra even went with her, but went home before going to see the President. The reason the Aussie companies are getting deals is because they are using a consultancy/lobbying company owned by Joe Hockey, ex USA Ambassador. Its not what you know but who you know. Which is why NZ companies have been left out in the cold.
The Abbott factory will be back in full production in a few months. And most of the slots for import have been filled by US companies importing from overseas manufacturing sites (Abbott, Mead Johnson, Reckitt etc). And the Australians who appear to be getting favourable treatment politically.
Silver Fern Farms were very pleased with the PM's help at their New York do..
Glowing reports from them.
Quote from: Poet on Jun 26, 2022, 07:48 PMQuote from: snapiti on Jun 25, 2022, 01:25 PMI hate speculating about takeovers on any company but A2 has all the ingredients to look very attractive, great products, great branding, a very dominant market position and best of all for T/O targets, IMO, a management team that is floundering which has helped the SP tumble with little recovery.......given how big some of the world dairy company players are and their own interest in entering the A2 milk market me thinks this one looks likely to attract a T/O
Do you think there is any possibility of a takeover while there are three class action lawsuits in progress?
Seems those would be a big negative for any potential suitor
you raise a good point however history shows us that these sorts of lawsuits are easily defendable......at worst one can exspect a slap with a wet bus ticket
Quote from: snapiti on Jun 28, 2022, 08:41 PMQuote from: Poet on Jun 26, 2022, 07:48 PMQuote from: snapiti on Jun 25, 2022, 01:25 PMI hate speculating about takeovers on any company but A2 has all the ingredients to look very attractive, great products, great branding, a very dominant market position and best of all for T/O targets, IMO, a management team that is floundering which has helped the SP tumble with little recovery.......given how big some of the world dairy company players are and their own interest in entering the A2 milk market me thinks this one looks likely to attract a T/O
Do you think there is any possibility of a takeover while there are three class action lawsuits in progress?
Seems those would be a big negative for any potential suitor
you raise a good point however history shows us that these sorts of lawsuits are easily defendable......at worst one can exspect a slap with a wet bus ticket
Bellamy's wet bus ticket cost them 50 million.
Class action suits like this are just short term noise. If an acquirer wants to buy A2 they won't care about a couple of Aussie law firms throwing mud for their own benefit.
Bubs hit the jackpot in the US
Will A2 follow
https://www.smh.com.au/business/companies/bubs-australia-looking-to-raise-63-million-to-meet-unexpected-us-demand-20220705-p5az5s.html
Quote from: winner (n) on Jul 05, 2022, 02:59 PMBubs hit the jackpot in the US
Will A2 follow
https://www.smh.com.au/business/companies/bubs-australia-looking-to-raise-63-million-to-meet-unexpected-us-demand-20220705-p5az5s.html
I'm not sure what the raising is really for. The ability to import infant formula into the US is only a temporary one and it expires on 14 November 2022. So they do not have an ongoing infant formula US business, other than for their products that are not baby formula (eg. toddler formula, pureed food sachets, etc). I'm not sure the market understands this, it would appear Bubs is taking advantage of any such misunderstanding.
Quote from: KW on Jul 06, 2022, 11:27 AMQuote from: winner (n) on Jul 05, 2022, 02:59 PMBubs hit the jackpot in the US
Will A2 follow
https://www.smh.com.au/business/companies/bubs-australia-looking-to-raise-63-million-to-meet-unexpected-us-demand-20220705-p5az5s.html
I'm not sure what the raising is really for. The ability to import infant formula into the US is only a temporary one and it expires on 14 November 2022. So they do not have an ongoing infant formula US business, other than for their products that are not baby formula (eg. toddler formula, pureed food sachets, etc). I'm not sure the market understands this, it would appear Bubs is taking advantage of any such misunderstanding.
sounds to me like they are using it as a will times excuse to raise some cash.
Maybe A2 should help them out since they seem devoid of any ideas to use their can stockpile
Naaiiice....
FDA Developing New Framework for Continued, Expanded Access to Infant Formula Options for U.S. Parents and Caregivers
https://www.fda.gov/news-events/press-announcements/fda-developing-new-framework-continued-expanded-access-infant-formula-options-us-parents-and
Quote from: Left Field on Jul 07, 2022, 11:21 AMNaaiiice....
FDA Developing New Framework for Continued, Expanded Access to Infant Formula Options for U.S. Parents and Caregivers
https://www.fda.gov/news-events/press-announcements/fda-developing-new-framework-continued-expanded-access-infant-formula-options-us-parents-and
Has potential but A2 are yet to even get in on the action, there are so many other players who already have a slice of the pie you would have to wonder how much would be in it for A2 with a pie sliced into such a large number of pieces. I reckon A2 has lost its disruptive ability and influence since Covid and has had its glory days.
Still early days on the USA market Kasper....
ATM has established a sound USA foothold but their Mataura Plant still has to come up to scale.
They clearly need to diversify away from too much reliance on China.
Ssooo let's hope the ATM team have a cunning plan up their sleeves.
Quote from: Left Field on Jul 07, 2022, 11:41 AMStill early days on the USA market Kasper....
ATM has established a sound USA foothold but their Mataura Plant still has to come up to scale.
They clearly need to diversify away from too much reliance on China.
Ssooo let's hope the ATM team have a cunning plan up their sleeves.
So much time to jump back on this one once it gets back on track although I have over 2 million reasons and some lifetime scars as to why I might not want to.
Quote from: Left Field on Jul 07, 2022, 11:21 AMNaaiiice....
FDA Developing New Framework for Continued, Expanded Access to Infant Formula Options for U.S. Parents and Caregivers
https://www.fda.gov/news-events/press-announcements/fda-developing-new-framework-continued-expanded-access-infant-formula-options-us-parents-and
Well that changes everything! Although maybe not for A2 LOL. But for Bubs definitely maybe. Although there is still a risk that the expanded import ability is limited to the big internationals, like Danone/Nestle and the US companies that have offshore manufacturing plants.
Trading on 32.8 times estimated FY22 earnings. https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
Market seems to be saying they will enjoy a strong rebound in sales and margins in the years ahead but what if those expectations aren't met ?
Quote from: Left Field on Jul 07, 2022, 11:41 AMStill early days on the USA market Kasper....
ATM has established a sound USA foothold but their Mataura Plant still has to come up to scale.
They clearly need to diversify away from too much reliance on China.
Ssooo let's hope the ATM team have a cunning plan up their sleeves.
most US supermarkets I have been into have a2. If I could post an image off my phone without dropping it into some other website i would show you what it looks like.
Further to my US observations. A2 has a few products on the shelf. At eye level. Very important! Great placement. One store had "half and half" being promoted at us$4.99. More expensive than other surrounding products.
It's in cabinets chock full of many other products so I am very pleased to see its position on the shelf.
Haven't found the Hershey one yet.
Bloomberg reporting today.... "Baby Formula shortage worsens as stocks fall more than 60% in some states."
C'mon ATM.
Quote from: Left Field on Jul 10, 2022, 11:32 AMBloomberg reporting today.... "Baby Formula shortage worsens as stocks fall more than 60% in some states."
C'mon ATM.
Care A2+(Australia) has just been given approval to supply 4.875 mill cans in August, A2M seems to be behind the 8 ball on this one and remember its only temporal until November.
But remember people, we're not submarine partners with the US. Of course the Aussie companies will get first dibs.
It is frustrating waiting for FDA approval. Their application has been in for several weeks so it can only be a matter of days before it is granted. I'm not aware of the approval process but maybe the reason for the length of time is due to the product being produced by a 3rd party (Synlait)? I also agree that there is likely to be a priority list given to the producers who have closer political ties. I feel A2 will be very keen to establish a market in USA as this would be an ideal market for IF produced at MVM (once the canning line is up and running) as they won't be able to send their IF produced at MVM to China until site registration is approved and that could take years... It appears demand is very strong in China and daigou trade is quickly improving in Australia (evident by the manufactured dates on the tins being only a few weeks old). I also think that they'll "starve" the Ozzie market to a degree. They have establish a strong market with direct sales and supply lines to China which gives them transparency and greater market understanding. Subsequently they won't want to bastardise that and revert to their old business model of sending a large percentage of their production to Ozzie and ending up not really knowing what is happening with it. I would also be confident that direct sales in China would be more profitable. IMO.
Quote from: Golfer01 on Jul 11, 2022, 09:11 AMIt appears demand is very strong in China and daigou trade is quickly improving in Australia (evident by the manufactured dates on the tins being only a few weeks old). I also think that they'll "starve" the Ozzie market to a degree. They have establish a strong market with direct sales and supply lines to China which gives them transparency and greater market understanding. Subsequently they won't want to bastardise that and revert to their old business model of sending a large percentage of their production to Ozzie and ending up not really knowing what is happening with it. I would also be confident that direct sales in China would be more profitable. IMO.
You raise some good points. Where did you get the relatively new dates on the products - from a friend or was that your own observation? I have also stated elsewhere that relying on individuals taking their product into China in their personal luggage does not seem like a sustainable strategy. In light of what happened with the daigou / lockdown fiasco, it would be good to see ATM emerge a better business with more sustainable sales channels and being closer to their market / clients.
Are things looking up for A2? Time to buy?
I'm reading about empty shelves in Australia for A2. Bubs saying strong growth in China and yes the Daigou is back. Even a shortage possibly looming in the UK for farm products due to lack of staff.
Possibility of FDA approval in the states. If successful will it be a short term thing or something bigger? A2 is already supplying 27000 stores (according to Craigs) with fresh milk , so have a possible easy entry point with existing distribution channels.
A profitable company with plenty of cash.
A lot to like or is it just those "rose tinted glasses"
Good question. I guess they clearly had an amazing hype deflation over the last two years. Difficult to say whether they are already at the bottom - their fundamentals still don't look cheap if I try to rate them based on analysts forecasts.
On the other hand - it is one of these companies very difficult to value. Sure - lots of revenue and their revenue CAGR still looks good and might well suprise, but lets face it - revenue is not what investors are living from - at the end it is only the bottom line which counts.
While the bottom line is black (well, just), it doesn't look flash, and whether they will manage to sell in future enough of their white powder for a healthy margin without losing this money again in some logistical or in some geopolitical hiccup? Who knows?
Sure - people always will need food, but do they really need for their babies some top premium A2 milk formula (which may or may not be better than other milk formula) or will it be more important for them to fill their (and their childrens) bellies with some local food they can afford?
I suspect that the demand for NZ based A2 formula in the Eastern Ukraine is currently limited, and so it will be in central Africa. I hear as well the Chinese are losing money while their real estate bubbles are deflating and their Covid lockdowns are ongoing (i.e. many won't feel as wealthy anymore). Just imagine these poorer (China) and starving areas (Africa, Eastern Europe, parts of Asia) growing ... and the rich areas where parents can afford to burn money for hyped up baby formula are shrinking.
Are these really ideal business conditions for A2M? I don't know ....
Ah yes, and just in case the post above is talking too much about fundamentals - I guess at the end this is a purely hype driven stock, right?
However TA does not look that flash either. SP for the last two years in an unbroken downtrend ... and despite some jitter still firmly below both MA 100 and MA 200.
I guess it does not appear to be a falling knife anymore, but its still in an established downtrend. Ask KW what she thinks about buying shares under these circumstances :P ;
Have the same concerns BP.
One of my main concerns with A2 was its reliance on China. Comvita is doing well in North America. Surely this would be a good opportunity for the company to start selling their formula in the states even if they're not making a lot of money initially. Now they are in the manufacturing business this could be a volume winner. 18 percent duty currently, high but would of thought feasible?
Are those empty shelves in Australia empty because of demand or poor stock management?
If the company gets FDA approval it's going to be material for the share price I think, even though potentially it is a short-term opportunity.
Quote from: Shareguy on Jul 12, 2022, 10:03 AMHave the same concerns BP.
One of my main concerns with A2 was its reliance on China. Comvita is doing well in North America. Surely this would be a good opportunity for the company to start selling their formula in the states even if they're not making a lot of money initially. Now they are in the manufacturing business this could be a volume winner. 18 percent duty currently, high but would of thought feasible?
Are those empty shelves in Australia empty because of demand or poor stock management?
If the company gets FDA approval it's going to be material for the share price I think, even though potentially it is a short-term opportunity.
I'm back in for a punt based on FDA approval plus upcoming result which will have a run up leading upto it, have less than a tenth of the shares I once held so happy at that level.
Agree with BP
I'd recommend waiting for a change in real 'news' (FY updates etc) and a positive change in the TA indicators ie 'golden cross.'
No hurry IMO.
Quote from: kasper on Jul 12, 2022, 10:17 AMI'm back in for a punt based on FDA approval plus upcoming result which will have a run up leading upto it, have less than a tenth of the shares I once held so happy at that level.
You might be in luck. Just been into a anther supermarket and zero infant formula in very empty looking shelves.
Quote from: Left Field on Jul 12, 2022, 11:42 AMAgree with BP
I'd recommend waiting for a change in real 'news' (FY updates etc) and a positive change in the TA indicators ie 'golden cross.'
No hurry IMO.
There is never a hurry to buy anything on the market really, its a bit like observing your tin roof starting to get a bit of surface rust, you could switch it out right then or do it in a few yrs and it still won't be leaking.
27 May 2022, FDA announce Australian co BUBS will be supplying Infant Formula to USA to held relieve severe shortage
30 May A2 announce they have applied to FDA to supply IF - subject to availability of supply.
8 July is last time FDA announced a company supplying to help relieve shortage. So far neither A2 or Fonterra have got approval.
16 July Bloomberg reports supply (at 10 July) is running at about 72%, an improvement from 70% the week before. They also report it is low income families that are suffering. (so not really A2's target market).
The new Formula Act (which will temporarily remove 27% tariffs applied to countries with out a Free Trade Agreement) may help big standard infant formula suppliers.
I think it is now safe to assume any hope of an SP improvement based on an FDA announcement in A2's favor is now dead in the water. A2 have been silent since their 30 May announcement. I just think they aren't chasing this particular opportunity hard.
I think they would have perhaps chased harder if they had extra supply. Which they probably dont as whatever they had would have been conservative after last years botch up and wanting to supply just enough for the Chinese sales days.
Given the lack of announcement of profit upgrade/downgrade I reckon they are close to meeting target based on China sales.
So what this all means, in summary is that A2 remains a non-growth company. With no aspirations to do anything with their cash. Despite SP recently being at all time lows.
Probably time for that English based chair to be woken from his slumber at the London gentleman's club, encouraged to sign a letter a resignation and begin the hunt for a new chair with some energy, creativity and an understanding of what it means to look after shareholders rather than self interest at the trough.
You can't like them on this years forecast numbers that's for sure. PE 32.5
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
With all that's going on in China with lockdown's, declining birth rates and domestic brands rapidly gaining traction to name some of the issues the increase in sales and margin the average analyst has for FY23 to get them on a forward PE of 24 look quite challenging to me.
They have a definite tailwind with the currency though which should help. I remain extremely cautious and I think they lost first mover advantage many years ago and this is rapidly transitioning into just another commodity. All the years of big talk of legal protection for their intellectual property over A2 milk has come to nothing but a load of hot air and bluster.
I don't see any good reason to invest.
A little more than a month out before results announcement is due. So lets refresh ourselves on the half year forecast
China label IMF sales are still expected to be up in FY22 and now expected to be significantly up in 2H22 versus 1H22. This is due to 1H22 having been impacted by distributor inventory rebalancing and in 2H22 as the Company's growth strategy starts to have a positive impact on MBS and DOL sales.
In English label IMF, sales are now expected to be up in FY22 and up in 2H22 versus 1H22 due to improved inventory levels and pricing, as well as improved execution in ANZ reseller and CBEC channels driven by the Company's growth strategy.
Incremental sales growth in Australian liquid milk for FY22 is still expected with sales still likely to be down in 2H22 versus 1H22 due to reduced COVID-19 related lockdowns and a corresponding reduction in levels of in-home consumption. Input costs are significantly higher than FY21, partially offset by an increase in pricing that took effect from November 2021.
In USA liquid milk, sales growth for FY22 is expected, with sales up significantly in 2H22 versus 1H22 due mainly to new product launches. EBITDA losses for FY22 in local currency are expected to remain at similar levels vs pcp due to a part-year impact of trade spend reductions and price increases, lower margin new product sales and continuing higher freight costs.
MVM revenue is now expected to be approximately $100 million (excluding intercompany revenue), previously expected to be $80 million. An EBITDA loss of approximately $20 million is still expected for the 11 months post-completion. No material change in EBITDA is expected despite the increase in sales due to an increase in milk costs and a reduction in more profitable nutritional sales
SP today is $4.91
A week ago I was talking to a former technical manager involved with Fonterra and now retired.
Looking back on his career, he said two of the biggest mistakes by ex Fonterra CEO Theo Spierings, were;
a.) the China acquisition
b.) Missing out on A2
He reckoned the majority of dairy herds will soon be A2.... but only one company can really benefit.
Still holding free held shares and taking a long term view.
The FDA is going to review istelf. But its a review of process (and one that includes tobacco/vaping as well)
They have 60 days to investigate and report. Lets call it August and September.
Nothing happens fast in govt departments. Lets give them six years to implement key changes. You dont unravel this in a hurry "In May, Califf testified before Congress about missteps that slowed the agency's response to contamination problems at the Michigan formula plant that triggered the shortage. While many of the problems happened before Califf started on the job, he struggled to explain who was ultimately responsible for food safety within FDA's bureaucracy.FDA's food program has a byzantine leadership structure in which there is a director for food and a separate deputy commissioner for "food policy and response."
The FDA boat has sailed and A2 isn't on it "Califf previously predicted the formula shortage could last until July. He said Tuesday that retail data show that supplies have improved with increases in both U.S. production and imports."What you're going to see is a gradual climbing out of the current situation as more and more formula becomes available," Califf said."
More here: https://www.pressherald.com/2022/07/19/fda-weighs-oversight-changes-after-formula-juul-troubles/
The USA FDA thing is not necessarily the panacea many think it is.
As I understand it, at present ATM hasn't got the stock of IF to supply a potentially huge USA market. Besides which, ATM may be better to sell its current IF stocks to Asia/China markets where it can get better margins/returns for IF than in the USA.
Maybe when MVM is up to speed ATM will be able to turn their attention to the USA IF market.... if the FDA allows it and if it can be done profitably.
Happy to wait to the next update. Until then it is all speculation.
https://amp.theaustralian.com.au/business/companies/fonterra-a2-milk-awaiting-fda-approval-to-export-formula-to-us/news-story/866effe981c5daa0c8842b4eee423919
Fonterra – the world's biggest dairy exporter and one of New Zealand's biggest companies with an extensive presence in Australia – has been awaiting approval since late May. "We have informed FDA that it is our intention to reallocate the infant formula stock we had earmarked for the US to New Zealand or other markets as it has a limited life span," Mr McVitty said.
Sounds like the FDA has said "yeah, nah".
Export / Import data for June month ex Stats NZ
Milk powder fell $57 million (5.7 percent) to $935 million; the quantity exported fell 28 percent. The average unit value rose 31 percent.
Suppose it means something re A2 performance
Luckily A2 do not export milk powder.
preparations of milk, cereals, flour, and starch (includes infant formula), up $87 million (58 percent)
Suppose it does mean something re A2 performance ;)
Quote from: CG on Jul 22, 2022, 04:08 PMLuckily A2 do not export milk powder.
preparations of milk, cereals, flour, and starch (includes infant formula), up $87 million (58 percent)
Suppose it does mean something re A2 performance ;)
Thanks for clearing the export stats up. Winner had me worried for a tab.
Also from the HotCopper thread, A2 have applied for a new trade mark for the USA market. Interesting.
Screen Shot 2022-07-22 at 7.15.52 PM.png
Quote from: winner (n) on Jul 22, 2022, 01:56 PMExport / Import data for June month ex Stats NZ
Milk powder fell $57 million (5.7 percent) to $935 million; the quantity exported fell 28 percent. The average unit value rose 31 percent.
Suppose it means something re A2 performance
I had a look at the Lyttleton April(?) data a while back and export numbers were well down
This feature film made in the Y-kato might be quite interesting.
The captivating and complex lives of cows (and one human) explored in documentary | Stuff.co.nz
https://i.stuff.co.nz/waikato-times/news/129330081/the-captivating-and-complex-lives-of-cows-and-one-human-explored-in-documentary
Quote from: Minimoke on Jul 22, 2022, 07:23 PMI had a look at the Lyttleton April(?) data a while back and export numbers were well down
April/June = heavily airfreighted.
Kingfish June quarter report implies they've bought about 1 million shares since March
Sam sticking with them -got $24m invested in them
Quote from: CG on Jul 22, 2022, 04:08 PMLuckily A2 do not export milk powder.
They certainly do export milk powder. From their website
"Chinese consumers are able to purchase either the Australia and New Zealand a2 Platinum® products via cross border e-commerce platforms, or our unique Chinese a2™至初® infant formula products across ~22,000 Mother and Baby stores in China or on domestic e-commerce sites.
All our infant formula products are produced by our strategic supply partner Synlait Milk in New Zealand.
a2 Milk™ branded fresh milk
and milk powder are also airfreighted directly from Australia and New Zealand.
Visit our website
a2™至初® China"
Quote from: Minimoke on Jul 22, 2022, 07:23 PMI had a look at the Lyttleton April(?) data a while back and export numbers were well down
I had a conversation with a furniture importer the other day about container shipping rates. He said prices are still going up (despite them coming down globally) because there are less containers leaving the country with exports, which is what frees up space and prices for importers as shippers dont like to bring empty containers over to NZ.
Quote from: KW on Jul 25, 2022, 01:03 PMI had a conversation with a furniture importer the other day about container shipping rates. He said prices are still going up (despite them coming down globally) because there are less containers leaving the country with exports, which is what frees up space and prices for importers as shippers dont like to bring empty containers over to NZ.
I am in the "container game", my employer being a
very large importer. It may well depend on size. For us rates have dropped massively from their COVID highs, and they are still coming down, albeit slowly and variably depending on origin.
Quote from: Raven on Jul 25, 2022, 01:18 PMI am in the "container game", my employer being a very large importer. It may well depend on size. For us rates have dropped massively from their COVID highs, and they are still coming down, albeit slowly and variably depending on origin.
I think it probably does depend on size, smaller importers probably had no problems finding spare capacity pre-Covid but now its still scarce, and they are probably being gouged for that capacity, especially if paying for casual bookings rather than long term contracts. I'm a big fan of imported furniture and follow quite a few importers on Facebook etc, and a lot of them have gone out of business or their stock has been reduced to a tiny handful of items.
Quote from: KW on Jul 25, 2022, 01:00 PMThey certainly do export milk powder. From their website
"Chinese consumers are able to purchase either the Australia and New Zealand a2 Platinum® products via cross border e-commerce platforms, or our unique Chinese a2™至初® infant formula products across ~22,000 Mother and Baby stores in China or on domestic e-commerce sites.
All our infant formula products are produced by our strategic supply partner Synlait Milk in New Zealand.
a2 Milk™ branded fresh milk and milk powder are also airfreighted directly from Australia and New Zealand.
Visit our website
a2™至初® China"
That is correct. However, as some might say there is milk powder and there is milk powder. The data that was posted and the one I was responding to was for commodity grade milk powder. Until recently A2 milk did not export such products, they do now after purchasing MVM. The one you mentioned is end product and for export purposes counted under different category along with infant formula to which I pointed out. In any way, this is how I understand it.
https://www.msn.com/en-nz/news/other/chinese-government-desperate-to-boost-declining-birth-rates/ss-AA101acx?ocid=msedgntp&cvid=a55b0f90fc534945b74ea166ac9a6e00#image=3
Market shrinking and Chinese manufactured brand share rapidly expanding are not encouraging headwinds for ATM.
Quote from: Basil on Jul 28, 2022, 01:11 PMhttps://www.msn.com/en-nz/news/other/chinese-government-desperate-to-boost-declining-birth-rates/ss-AA101acx?ocid=msedgntp&cvid=a55b0f90fc534945b74ea166ac9a6e00#image=3
Market shrinking and Chinese manufactured brand share rapidly expanding are not encouraging headwinds for ATM.
Its a problem for bog standard IF manufacturers. Less so for premium brand companies.
Meanwhile just up the road from MVM......
https://www.odt.co.nz/regions/south-otago/plant's-biomass-boiler-beginning-operation
https://www.afr.com/companies/manufacturing/a2-milk-s-top-corporate-daigou-is-no-longer-buying-20220726-p5b4rg
Mr Zhang is the largest corporate daigou trader in Australia for various brands from baby formula to vitamins – and was once a2 Milk's largest customer moving thousands of pallets of a2 Platinum every month to China.
He is considered by many as the founder of the daigou channel – where overseas shoppers buy products like skincare, supplements and baby formula from outside China to sell to those living in China. Once a cottage industry, it is now worth many billions of collars of annual sales.
Mr Zhang has not bought a single baby formula tin since March from the dual-listed a2 Milk – after having been its largest customer in the first half of the 2022 fiscal year.
While Mr Zhang's relationship with a2 Milk was headed south, his relationship with the smaller rival Bubs Australia was getting stronger. In March entities associated with his AZ Global penned an equity incentive deal with Bubs.
Quote from: KW on Aug 02, 2022, 04:26 PMhttps://www.afr.com/companies/manufacturing/a2-milk-s-top-corporate-daigou-is-no-longer-buying-20220726-p5b4rg
Mr Zhang is the largest corporate daigou trader in Australia for various brands from baby formula to vitamins – and was once a2 Milk's largest customer moving thousands of pallets of a2 Platinum every month to China.
He is considered by many as the founder of the daigou channel – where overseas shoppers buy products like skincare, supplements and baby formula from outside China to sell to those living in China. Once a cottage industry, it is now worth many billions of collars of annual sales.
Mr Zhang has not bought a single baby formula tin since March from the dual-listed a2 Milk – after having been its largest customer in the first half of the 2022 fiscal year.
While Mr Zhang's relationship with a2 Milk was headed south, his relationship with the smaller rival Bubs Australia was getting stronger. In March entities associated with his AZ Global penned an equity incentive deal with Bubs.
Rumours that USA IF deal about to be announced this week. Any surplus not sold to Daigou could keep USA babies happy.
A2 up 8.8% at the moment. And over 9m shares traded today on ASX
Trading halt
https://www.nzx.com/announcements/396312
Quote from: Minimoke on Aug 02, 2022, 04:30 PMRumours that USA IF deal about to be announced this week. Any surplus not sold to Daigou could keep USA babies happy.
A2 up 8.8% at the moment. And over 9m shares traded today on ASX
Currently in a trading halt. Leaky boat?
Screwing over the daigou channel was what brought Bellamys unstuck. Especially if even despite the China problems Zhang was still their biggest customer in 1H22.
7.6 m traded on asx. Upward price movement suggests something positive to me.
Quote from: Shareguy on Aug 02, 2022, 04:51 PMTrading halt
https://www.nzx.com/announcements/396312
Spoil sports - just as the fun was starting
Reasons for trading halt: We have become aware of media speculation concerning the status of our application to the US Food and Drug Administration for permission to sell infant formula within the United States of America. We are requesting a trading halt to provide us with additional time to properly consider the current information and to consider new information as it becomes available, and inform the market.
It would amuse me no end if they get a US deal, but its for the same volume as they were previously supplying Zhang with, so there is no net growth :D
It looks like people are playing the next best thing and now Synlait is ripping. Although there is no guarantee that any extra production (if there is extra production) will be at Synlait, its more likely to be Fonterra - reason being that Fonterra's plant is already approved through their Danone deal.
Quote from: Shareguy on Aug 02, 2022, 05:09 PMReasons for trading halt: We have become aware of media speculation concerning the status of our application to the US Food and Drug Administration for permission to sell infant formula within the United States of America. We are requesting a trading halt to provide us with additional time to properly consider the current information and to consider new information as it becomes available, and inform the market.
Its hardly earth shattering stuff. Wonder how they're getting on with the class action lawsuits.
latest just out...
MKTUPDTE: ATM: a2MC notes and responds to media speculation
The a2 Milk Company (a2MC, the Company) notes a media article that has
appeared online in the Australian Financial Review today that suggests that
the Company is nearing approval from the US Food and Drug Administration
(FDA) to allow a2MC to import infant milk formula products into the US and
that such approval could be received "as soon as this week".
The Company wishes to confirm that while we have been informed by the FDA
that our application is under active review, at this stage there is no
certainty as to the outcome of the application or the timing of any approval.
Quote from: Basil on Aug 02, 2022, 05:28 PMIts hardly earth shattering stuff. Wonder how they're getting on with the class action lawsuits.
Yes it's a short term thing. Maybe more to it. Once again the market found out before the announcement......
Up 9 percent today and 8 million traded on asx before halt.
Quote from: KW on Aug 02, 2022, 05:20 PMIt would amuse me no end if they get a US deal, but its for the same volume as they were previously supplying Zhang with, so there is no net growth :D
It looks like people are playing the next best thing and now Synlait is ripping. Although there is no guarantee that any extra production (if there is extra production) will be at Synlait, its more likely to be Fonterra - reason being that Fonterra's plant is already approved through their Danone deal.
then may be you should add this quote from AFR article as well
"He [David Bortolussi] told The Australian Financial Review that daigou channel still plays a critical role in new user acquisition and brand development but hinted that Mr Zhang was unwilling to exclusively commit to deal with a2 Milk – without directly commenting on his allegations.
"During the past year, we have increased our direct engagement with the daigou community, provided more marketing support and seen an increasing number of daigou representing our a2 Platinum brand," he said.
"Consistent with our growth strategy communicated to the market last year, we are simplifying and delayering our English Label infant milk formula distribution network. In doing so, we are evolving our distribution network towards partners willing to commit to more exclusive, transparent and performance-based arrangements, and we are pleased with progress to date.""
Just because mr.Zhang left the building does not mean there was no replacement. I'm sure there were a few smaller daigou that were happy to take his share and seems this is what DB has confirmed. So, now A2 has more control over distribution and pricing in China which is great.
The truth is probably somewhere in the middle. Other diagou players would have picked up some of his business but with all the issues with logistics caused by Covid and given significant price advantages Local Chinese manufacturers deliver with support from the CCP to buy Chinese made, this all means that the Chinese manufacturers are basically eating, (or should that be drinking ?) ATM's lunch for them.
All this in a shrinking total addressable market as the number of babies born in China are in serious decline.
I fail to see ANY compelling reason at all to jump back in here given very demanding metrics and no obvious route back to being a high growth company.
I reckon its a case of SELL before the annual result gives the company yet another opportunity to disappoint you later this month.
There is of course a significant growth opportunity of selling IF into the USA market. A market that had been essentially previously closed.
On 2 August the FDA said "Infant formulas for which the FDA has exercised enforcement discretion that are imported to the U.S. on or before November 14, 2022, can remain on the market after that date. The FDA does not intend to require product on the market to be removed after that date."
The market is currentyl reporting a 30% out of stock rate - with no sign of improvement until November. Paretns of babies afre crying out "Outr govt is starving our babies" so Biden at some point will make change happen in the FDA which is currently moving at glacier pace.
So, if A2 can get on that list by 14 November (which is months away) it has a Green Card to get as much product as possible into the market by 14 Nov.
From there we just need FDA to keep removing barriers to import foreign IF. And once in the market, that should smoot that course
A2 just needs to get Synlait and Mataura (gee - isn't it good it has another local IF plant coming on stream) to get in behind it.
And its fortunate the A2 brand is already well known in the USA through its liquid milk sales.
In the meantime there are calls within the USA to make sure a shortage like this never happens again. And best way to do that is open up foreign supply.
Which won't be a bad thing for mums worried about little baby tum tums.
Fun fact. US babies consume about 65 million 8-ounce bottles a week. So far the FDA has approved the import of 396.5 million 8oz bottles. So A2's entry (and ability to supply meaningful quantities at a decent margin) is by no means guaranteed. (Probably worth noting that out of the 396 bottles 121m are from Australia Care - and its A2 protein formula. So someone else is doing A2 legwork on A2M's behalf. And you have to wonder how it is they managed that supply and A2M didnt)
Still a risky buy.
Global Dairy Trade index down 6.1% overnight.
Not a lot of confidence in Whole Milk Powder.
Index has been trending down since 1 March 2022. And is back to levels found in Aug 2021 and Feb 2021 - which was a modern high
so Synlait may be able to take advantage of Abbot Laboratories problems in the US.... ironic
Dumping your biggest customer because they wont agree to sell your product exclusively seems to be cutting off your nose to spite your face. Especially since now Zhang will be 100% focused on selling Bubs instead.
Speaking of Bubs, they are also supplying A2 formula to the United States.
Also you need to understand how infant formula distribution works in the US. Approx 50% of it is purchased and distributed via the Govt WICs programme (its free to consumers as most of it is specialty formula), the rest by market retailers. After November, while IF on the market can stay on the market, it is by no means guaranteed that the US Govt will continue to order foreign IF (in fact, I'd say its highly unlikely once Abbott is back at full production). However, those that are supplying the market retailers like Walmart and Target and who have locked in ongoing distribution deals are looking well set up.
So its not just FDA approval required, its also retail distribution deals need to be signed.
A good explanation of how WICs works is here https://www.cbpp.org/research/food-assistance/infant-formula-shortage-highlights-wics-critical-role-in-feeding-babies
Took advantage of the uplift in price and trimmed my position this morning. There are a few clouds on the horizon. I see the USA market as a great opportunity. A good chance though that it's only short-term.
Quote from: KW on Aug 03, 2022, 01:13 PMDumping your biggest customer because they wont agree to sell your product exclusively seems to be cutting off your nose to spite your face. Especially since now Zhang will be 100% focused on selling Bubs instead.
Speaking of Bubs, they are also supplying A2 formula to the United States.
Also you need to understand how infant formula distribution works in the US. Approx 50% of it is purchased and distributed via the Govt WICs programme (its free to consumers as most of it is specialty formula), the rest by market retailers. After November, while IF on the market can stay on the market, it is by no means guaranteed that the US Govt will continue to order foreign IF (in fact, I'd say its highly unlikely once Abbott is back at full production). However, those that are supplying the market retailers like Walmart and Target and who have locked in ongoing distribution deals are looking well set up.
So its not just FDA approval required, its also retail distribution deals need to be signed.
A good explanation of how WICs works is here https://www.cbpp.org/research/food-assistance/infant-formula-shortage-highlights-wics-critical-role-in-feeding-babies
Dealing with biggest client isn't always a good thing for business (Plexure comes to mind). The fact that company was able to let such client go shows that they were in a better position to negotiate. From what I understand there is no shortage of other clients who are happy to deal with a2 on their terms. Previously letting big client to run the show got them into troubles in the first place. Now a2 is taking full control of their distribution network. Mr. Zhang was given a choice to work under a2's terms or walk away. He chose latter and judging by this article it seems now he is regretting it. He can have all Bubs he wants, the thing is Bubs is nowhere near as popular as a2, does not have manufacturing capability to match a2 and does not have SAMR approval which would allow them to make official sales in China.
Anyway, was it a right move or not will be revealed in 4 weeks. If second half is better or at least same as first it will prove that it was the right move.
Everybody who is following this company is aware how stuff works in US. This approval is not about to sell extra mil of tins it's about to establish new market. a2 is in better position to do so than other new participants because as it was mentioned before they already have established distribution network over there.
This article in BusinessDesk says A2 (and Fonterra) were too slow of the mark to make the most of shortage IF in the USA ..... not surprising
https://businessdesk.co.nz/article/primary-sector/bubs-bonanza-fonterra-and-a2-milk-miss-the-boat
Quote from: CG on Aug 03, 2022, 02:38 PMHe can have all Bubs he wants, the thing is Bubs is nowhere near as popular as a2, does not have manufacturing capability to match a2 and does not have SAMR approval which would allow them to make official sales in China.
Bubs deal with Zhang - "Entered strategic equity-linked alliance with lead Daigou distributor, Willis Trading; conditional on product purchase milestones of at least $50M in FY22 and $80M to $120M in FY23". From their 4Q 4C "China: up 523% pcp, contributing 64% of quarterly sales - Corporate Daigou sales were up 1,201% pcp". Whereas their Q3 4C had China sales only up 8%. Zhang clearly making a huge difference.
BUBs (and the other Aussie) products enter the USA market tariff free under Australia's Free Trade Agreement, NZ infant formula is subject to 25% tariffs (currently suspended until December but then will be reimposed). The FTA is probably one reason why the Australian producers were approved so quickly. The USA doesnt have many FTAs - and none with traditional dairy producers like the EU, UK or NZ.
If you are after a high growth IF stock, I see BUBs as having the best upside share price wise, compared to A2. Its growing sales in China, has a lock on the US market, and is much smaller in size so any increase in sales makes a proportionately outsized difference to revenue and profits. I rode A2 from 54c to $12, and it bought me my house, hoping to do the same with BUBs and get a bach in Queenstown lol 8)
Quote from: KW on Aug 05, 2022, 05:28 PMBubs deal with Zhang - "Entered strategic equity-linked alliance with lead Daigou distributor, Willis Trading; conditional on product purchase milestones of at least $50M in FY22 and $80M to $120M in FY23". From their 4Q 4C "China: up 523% pcp, contributing 64% of quarterly sales - Corporate Daigou sales were up 1,201% pcp". Whereas their Q3 4C had China sales only up 8%. Zhang clearly making a huge difference.
BUBs (and the other Aussie) products enter the USA market tariff free under Australia's Free Trade Agreement, NZ infant formula is subject to 25% tariffs (currently suspended until December but then will be reimposed). The FTA is probably one reason why the Australian producers were approved so quickly. The USA doesnt have many FTAs - and none with traditional dairy producers like the EU, UK or NZ.
If you are after a high growth IF stock, I see BUBs as having the best upside share price wise, compared to A2. Its growing sales in China, has a lock on the US market, and is much smaller in size so any increase in sales makes a proportionately outsized difference to revenue and profits. I rode A2 from 54c to $12, and it bought me my house, hoping to do the same with BUBs and get a bach in Queenstown lol 8)
You see, in 2020 a2 had unloaded hundreds of millions worth of their product into daigou resellers, which they thought was a wonderful thing at the time. Much later (as they had no control of distribution and had no idea what happened to product once it changed hands) they realised all those products just stuck with those resellers because they could not sell it, stop ordering, discounting, damaging the brand and the sh!t with downgrades began. The rest us they say is history. The point of this is just because mr. Zhang took a load of Bubs products and Bubs counted it as a huge sale in 4th quarter does not guaranty yet it will find its way to the end consumer. The real result of this partnership will be known probably around second quarter. So, will we see another thousand percent increases in sales to daigou, well, who knows but it will be interesting to watch. All these big percentages of small numbers might be impressive but in reality they are just smoke and mirrors.
BTW, I don't know when exactly Bubs and mr. Zhang went into agreement as it was published in 4th quarter, but if they start dealing just in that quarter it seems mr. Zhang is not up to the game as Bubs "Q4 gross revenue: $48.1m" and "Receipts from customers $30m" somewhat short of mr. Zhang's $50m, but again I'm not sure about timing. For comparison, by my calculations, even now a2 makes $15-20m a week just in infant formula sales and around $2m a week in net profit overall.
As for how FDA makes their decisions I think it's a mystery to anybody. I have my own conspiracy theory. It looks like they approve only either foreign branches of existing players or some small not very well known companies which unlikely to have any threat to existing oligopoly. Plus it looks like Bubs was nagging at FDA for some time before this crisis. But as I said it's just a theory.
I do not know who has better upside share price wise, I have no crystal ball :) but if a2 can execute on its new strategy and get away from been just infant formula company then anything is possible.
I won't brag about my affairs with a2 as it might make some people very jealous :) will only say I'm in it since way before 54c and still have plenty for the second wave.
But by all means good luck to you.
Quote from: KW on Aug 05, 2022, 05:28 PMhoping to do the same with BUBs and get a bach in Queenstown lol 8)
Queenstown is to cold and to far away. I'd rather have a floating bach on the waterfront :) https://www.trademe.co.nz/a/motors/boats-marine/motorboats/listing/3697595690
I reckon ATM is a strong SELL here after the recent unwarranted bounce.
Quote from: CG on Aug 05, 2022, 08:38 PMBTW, I don't know when exactly Bubs and mr. Zhang went into agreement as it was published in 4th quarter, but if they start dealing just in that quarter it seems mr. Zhang is not up to the game as Bubs "Q4 gross revenue: $48.1m" and "Receipts from customers $30m" somewhat short of mr. Zhang's $50m, but again I'm not sure about timing. For comparison, by my calculations, even now a2 makes $15-20m a week just in infant formula sales and around $2m a week in net profit overall.
Signed in March 2022. So only one quarter of sales. The $50M is for the first year, not first quarter.
Quote from: KW on Aug 06, 2022, 10:35 AMSigned in March 2022. So only one quarter of sales. The $50M is for the first year, not first quarter.
Common, "
at least $50M in FY22". FY22 ended five weeks ago. Okey, $50m in 4 months, unless all 4th quarter sales is mr. Zhang sales I don't think he's gonna make it
Both ATM and BUB's well positioned IMO. Both useful defensive niche stocks in a food hungry world.
TA charts hinting at an interesting trend change for both.
The law of small numbers says BUB's may be the better option in the short term.
Meanwhile ATM is regaining momentum and strengthening their Chinese distribution channels/margins while apparently also gaining market share. I don't see the USA market as a Panacea for ATM (yet) but as they have pointed out many times in their updates, progress in USA parallels ATM's growth in the Australian market, ie slow and steady (as befits a premium niche.) We will be better informed when we see ATM's next update.
Quote from: CG on Aug 06, 2022, 11:41 AMCommon, "at least $50M in FY22". FY22 ended five weeks ago. Okey, $50m in 4 months, unless all 4th quarter sales is mr. Zhang sales I don't think he's gonna make it
Sorry, my mistake. It was for the full year not the quarter, as it included previous revenues from the group not just new revenue post the agreement. However, it has been revised down to $44M now
"Willis Trading Limited worked with Bubs to allow for supplies of infant formula to be redirected to USA without disrupting its consumers in May and June 2022 by reducing safety stock.
Issue of shares conditional on the Alpha Group meeting an updated product purchase milestone of at least A$44 million in FY22"
Jenny Ruth on A2 and IF into the USA
While the opportunity may prove to be a short near-term benefit for A2, we view the prospect of material long-term value as unlikely."
A2 share price frenzy – but is the US formula market worth it?
https://businessdesk.co.nz/article/opinion/a2-share-price-frenzy-but-is-the-us-formula-market-worth-it
Interesting that the 'as soon as this week' comment in the AFR had a fair bit of poetic licence attached it
Doubting Thomases
Craigs Investment Partners analyst Stephen Ridgewell noted in a June report that US exports of formula could add between $6m and $9m of earnings before interest and tax to A2's results for the year ending June 2023.
"The real question is whether A2 can leverage this to establish itself in the US market in the long run," Ridgewell said.
But he noted the US formula market is much smaller than China's, and "has structurally lower margins, as well as trade barriers in the form of high tariffs and the onerous FDA approval process".
For the US market to be viable for A2 long term, the FDA would need to approve its products for sale on a long-term basis, and the US would need to axe tariffs.
"As yet, there are no signs that this will happen," Ridgewell said.
I think the recent share price bounce is much ado about nothing.
Quote from: Basil on Aug 08, 2022, 10:13 AMI think the recent share price bounce is much ado about nothing.
nice little AFR spruike. Usual shenanigans
Quote from: Minimoke on Aug 08, 2022, 10:51 AMnice little AFR spruike. Usual shenanigans
Someone should launch a class action law suit against them ;) ...actually speaking of such things I wonder how those actions are coming along against ATM ?
Be able to update this soon
Fcast sales for F22 year are $1.39 billion - up 15% on prior year - that's pretty good
Suppose F23 forecasts will be rubbish after the full year announcement and they say who the secret new global customer is as well as expected huge gains in the USA
0000a2.JPG
Quote from: Basil on Aug 08, 2022, 10:13 AMI think the recent share price bounce is much ado about nothing.
I think it was company supplied PR intentionally designed to distract from the other article that was published the same day saying they had lost their biggest customer. But then, I'm a well known cynic lol
Quote from: Shareguy on Aug 08, 2022, 09:40 AM"The real question is whether A2 can leverage this to establish itself in the US market in the long run," Ridgewell said.
But he noted the US formula market is much smaller than China's, and "has structurally lower margins, as well as trade barriers in the form of high tariffs and the onerous FDA approval process".
For the US market to be viable for A2 long term, the FDA would need to approve its products for sale on a long-term basis, and the US would need to axe tariffs.
"As yet, there are no signs that this will happen," Ridgewell said.
Yep, it's a question and not a given fact. If a2 can gain access now outcome will be known in couple years at best. US infant formula market is not just much smaller than China's it's smaller than many other countries. However, it's a big market for dairy and a2 need to establish itself as a dairy company and not just as infant formula company. But it looks like not many people understand that. So, expecting some miracle in short term is just naive.
Btw, high tariffs could be avoided by establishing local manufacturing company if needed. They do have money.
Quote from: winner (n) on Aug 08, 2022, 11:42 AMBe able to update this soon
Fcast sales for F22 year are $1.39 billion - up 15% on prior year - that's pretty good
Suppose F23 forecasts will be rubbish after the full year announcement and they say who the secret new global customer is as well as expected huge gains in the USA
It's at upper end of my forest $1.36-1.39b. There won't be forecast for F23 (they never did forecasts except that time with downgrades when they tried to soften the blow), there will be guidance similar as at HY presentation. However, I would expect they will target at least 15% growth in revenue as management bonuses depend on that. Not sure what new secret global customer you are talking about? Probably confusing it with Synlait. There won't be any expectation of huge gains in US
The a2 Milk Company (a2MC, the Company) wishes to advise that earlier today it received notification from the US Food and Drug Administration (FDA) that, at this time, the FDA is deferring further consideration of the Company's request for enforcement discretion to import infant milk formula (IMF) products into the US.
The Company has also subsequently been advised by the International Dairy Foods Association (IDFA) that equivalent letters have been sent to all pending enforcement discretion applicants, indicating that the FDA is deferring any further review at this time of all pending applications.
Authorised for release by
David Bortolussi
Managing Director and Chief Executive Officer
The a2 Milk Company Limited
Quote from: NZInvestor on Jul 20, 2022, 03:25 PMThe FDA is going to review istelf. But its a review of process (and one that includes tobacco/vaping as well)
They have 60 days to investigate and report. Lets call it August and September.
Nothing happens fast in govt departments. Lets give them six years to implement key changes. You dont unravel this in a hurry "In May, Califf testified before Congress about missteps that slowed the agency's response to contamination problems at the Michigan formula plant that triggered the shortage. While many of the problems happened before Califf started on the job, he struggled to explain who was ultimately responsible for food safety within FDA's bureaucracy.FDA's food program has a byzantine leadership structure in which there is a director for food and a separate deputy commissioner for "food policy and response."
The FDA boat has sailed and A2 isn't on it "Califf previously predicted the formula shortage could last until July. He said Tuesday that retail data show that supplies have improved with increases in both U.S. production and imports."What you're going to see is a gradual climbing out of the current situation as more and more formula becomes available," Califf said."
More here: https://www.pressherald.com/2022/07/19/fda-weighs-oversight-changes-after-formula-juul-troubles/
Today's announcement no surprise
Quote from: Left Field on Jul 20, 2022, 04:16 PMThe USA FDA thing is not necessarily the panacea many think it is.
As I understand it, at present ATM hasn't got the stock of IF to supply a potentially huge USA market. Besides which, ATM may be better to sell its current IF stocks to Asia/China markets where it can get better margins/returns for IF than in the USA.
Maybe when MVM is up to speed ATM will be able to turn their attention to the USA IF market.... if the FDA allows it and if it can be done profitably.
Indeed no surprise with today's news.....but SP getting a reality check just the same.
Quote from: Left Field on Aug 10, 2022, 10:49 AMIndeed no surprise with today's news.....but SP getting a reality check just the same.
Reality is to always deal with fact rather than speculation. Especially with shares that are renown for their manipulated market.
Annual results coming. Time to sit back and wait for the detail
Otherwise this remains a traders dream
NZ should have bought some submarines ;D
Not ATM. But off a farm not far from Synlaits plant. Thanks guys - for getting your advertising out on the local radio
https://www.canterburyschoice.co.nz/
Quote from: NZInvestor on Aug 10, 2022, 11:59 AMNot ATM. But off a farm not far from Synlaits plant. Thanks guys - for getting your advertising out on the local radio
https://www.canterburyschoice.co.nz/
Looks interesting. They seem to have real milk, even real bread and salami (not the cr*p most supermarkets sell in NZ).
I would try, but given we have all this stuff ourselves (homemade) - I'll leave it to others to try.
Results out today look encouraging.......A2 back on track........... Share buy back will help maintain SP growth.... this holder happy.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/397774/377781.pdf
• Revenue growth of 19.8% to $1,446.2 million (11.2% ex-MVM3) with 2H22 up 18.9% on 1H22 (15.7% ex-MVM)
- China label and English label IMF sales up 12.2% and 11.6% respectively
- ANZ and USA liquid milk sales up 1.8% and 30.2% respectively
• Earnings before interest, tax, depreciation and amortisation (EBITDA4) up 59.0% to $196.2 million. EBITDA to sales
margin increased to 13.6% (16.1% ex-MVM) compared to 10.2% in FY21
• Net profit after tax (NPAT) including amounts attributable to non-controlling interests up 42.3% to $114.7 million with $122.6 million attributable to owners of the Company5
• Earnings per share up 51.8% to 16.5 cents in FY22 compared to 10.9 cents in FY21
• Strong balance sheet with closing net cash6 of $816.5 million with operational cash conversion7 of 114% during the year
• Positive outlook for FY23 with high single digit revenue growth and EBITDA margin improvement expected (see Outlook below for further detail, including key industry and business risks)
Finally some good news. And finally an announcement on doing something with the shed load oaf cash. After buyback still leaves them with $666m in the bank - so loads of opportunity to reinvest that I hope they maximise.
Wil be interesting to see how fickle market reacts today. 7% increase on the cards.
That puts it on a current P/E of 33 with "single digit growth" forecast. So still overpriced :(
I guess management would prefer a share buy back rather than a dividend as the share buyback gets them their performance shares/options. But in a bear market where prices will continue falling, its basically just pissing money away. At least a dividend is cash in the hand that shareholders can use to help with the escalating cost of living that everyone is experiencing right now. Maybe can afford some of that $20 a block cheese lol.
Quote from: KW on Aug 29, 2022, 09:22 AMThat puts it on a current P/E of 33 with "single digit growth" forecast. So still overpriced :(
I guess management would prefer a share buy back rather than a dividend as the share buyback gets them their performance shares/options. But in a bear market where prices will continue falling, its basically just pissing money away. At least a dividend is cash in the hand that shareholders can use to help with the escalating cost of living that everyone is experiencing right now. Maybe can afford some of that $20 a block cheese lol.
Not wrong on that front. I could have enjoyed a $0.20 dividend
They could justify a 15c ordinary dividend and just use the cash pile to fund growth.
Not sure why the favour the buyback option really but it's ok.
Off to the races and yet it was already on very elevated metrics at Friday's closing price.
A few things I like in tough economic times.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/397774/377792.pdf
- 1.446 mill revenue an increase of 19.8%
- 114.7 mill NPAT an increase of 42.3%
- USA revenue up 30.2%
- EPS up 51.8% to 16.5 cps
- Launch of New Lactose Free fresh milk into Aus market in Aug 2022 ( Market est at $130 mill.)
- New Management team have clearly turned A2M around and are showing a good understanding of this complex market.
Happy to retain my free held shares at 5% of portfolio.
I still think a lot of caution is warranted, especially given the metrics
Improvements this year were all off disastrously bad comparatives so need to be viewed in that context.
I also note from the presentation:-
- Gross margin percentage in FY23 is expected to be broadly in line with FY22, (remember the days it was 30%, now just 13.6% and no improvement expected next year)
− Significant increase in sustainability targets, initiatives and impact in many areas of the business, particularly MVM electrification project, (lots more money to be poured down the ESG rat hole)
Lots of other positives and negatives in there http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/397774/377792.pdf
Not for me.
The market seems to like the result...... up over $6.00 today (ie up around 11%) and likely to settle north of $6.00 in the days/weeks ahead.
Solid result under current circumstances. Better than I hoped for. SAMR renewal and any signs of birth rate increase in China will provide extra boost
Lets spend a moment or two focussing on the positives (since some of us have had enough of the negatives over the past year or so)
Remember how it was going to be all doom as chines birthrates were dropping. Well Chaina sales up 24.5% to $726m and Infant Formula up 11.9% to $1,022m
Overall I would say a good result which shows they have turned a corner and are dealing with their issues.
IMO it's good to see a reduction in reliance on Daigou. I do not view Daigou as a sustainable & legitimate sales channel for a company that needs to be above board in action AND appearance. It was always going to be painful to transition away from it and I firmly believe ATM will emerge a stronger business as a result of the Covid lockdown shenanigans.
I still laugh at calling marketing spend "investment". Yes that is how marketers see it. However, in the real world it is an expense and increasing that spends hurts your profitability in the short term. You know marketers are in charge when they talk of ATL vs BTL spend - on a side note I have never seen so many acronyms in a presentation!
I see they laid out a plan out to FY26 to get to $2b in sales. I would really like to see USA sales kick on.
I am not 100% sold on share buybacks but with $190m of NZ tax losses and only $50m of NZ imputation credits, it appears a dividend would not be overly beneficial or sustainable for NZ shareholders in the short term. There is little point paying dividends without imputation credits.
GLTAH.
Guru from Fisher Funds on RNZ today said that ATM on track to $2 Bill in revenue in next 5 yrs (no big stretch IMO,) and that their success in these recent results are even more favourable when you consider the freight/logistics issues in the world this year, plus China's declining birth rates, plus harsh Covid lock downs.
Interesting times ahead. Further gains today I reckon.
Quote from: Ferg on Aug 29, 2022, 07:56 PMOverall I would say a good result which shows they have turned a corner and are dealing with their issues.
IMO it's good to see a reduction in reliance on Daigou. I do not view Daigou as a sustainable & legitimate sales channel for a company that needs to be above board in action AND appearance. It was always going to be painful to transition away from it and I firmly believe ATM will emerge a stronger business as a result of the Covid lockdown shenanigans.
I would be wary of them moving away from it. Social ecommerce is very, very big in China, and the lockdowns have only entrenched consumers reliance on it. Chinese consumers individually and group buy through WeChat - a platform that just because we in the West do not use (or even understand) does not mean that its not a huge platform (which it is, along with ones like Pinduoduo). Thinking that moving to a Western style of distribution is a good thing, may turn out to be a false economy. Ditching the daigou almost destroyed Bellamys (and did destroy their shareholders).
This from an unnamed source via Hot Copper
]a2 Milk mulls China, NZ deals to boost market access
The a2 Milk Company chief executive David Bortolussi is mulling acquisitions in China and New Zealand to help gain faster access to a wider range of Chinese label infant nutrition formulations for the largest infant formula market in the world.
"We're unable to expand our portfolio. We want to achieve greater market access in terms of registrations, which is a complicated process," he said. " We're not close to announcing any deals or anything but ... at some stage it wouldn't be surprising for us to potentially announce some form of joint venture or acquisition.
It could be in partnership with China Animal Husbandry Group to acquire an asset in New Zealand or in China, that brings with it the prospect or actual registration as part of that acquisition."
Quote from: KW on Aug 30, 2022, 11:50 AMI would be wary of them moving away from it. Social ecommerce is very, very big in China, and the lockdowns have only entrenched consumers reliance on it. Chinese consumers individually and group buy through WeChat - a platform that just because we in the West do not use (or even understand) does not mean that its not a huge platform (which it is, along with ones like Pinduoduo). Thinking that moving to a Western style of distribution is a good thing, may turn out to be a false economy. Ditching the daigou almost destroyed Bellamys (and did destroy their shareholders).
Ditching daigou would be a wary. Luckily they don't, daigou will remain as one of many other channels they support. David B was talking about it during investor call. I think he has much better understanding of issue than many on here might think.
To put my comments into context, I was not suggesting a wholesale ditching of daigou...I mentioned a "reduction in reliance". IMO building a business whereby private citizens buy your product from a third party to then take it across the border in their hand luggage is neither sustainable or (I know I will get bashed here) legitimate. To put it bluntly it is a form of smuggling that is circumventing cross border controls/tariffs/whatever. IMO ATM will emerge a better business if they are not so reliant on that sales channel. Expending efforts on other sales channels will insulate them from the whims of social media, third party celebrities, stock aging issues and/or anti-smuggling initiatives.
Strengthening more traditional sales channels and other sales channels will make them a more sustainable and legitimate business. Edit: yes there is still a place for Daigou, but it should not be the #1 focus and/or the business should not be built around that. So it appears ATM are on the right track with their sale channel initiatives.
Quote from: Ferg on Aug 30, 2022, 09:24 PMIMO building a business whereby private citizens buy your product from a third party to then take it across the border in their hand luggage is neither sustainable or (I know I will get bashed here) legitimate.
Thats not how the daigou work. Australian based daigou buy the product in Australia, then post it direct to their buyers in China (either personally, or more often utilising one of the specialty freight forwarders set up to do this in bulk) - there is no suitcase or physical travel involved. Then there are the daigou in China who place orders for the product in China which is fulfilled by a corporate daigou who has shipped the product into China, who then sends the product direct to the consumer. BUBs calls their daigou channel a "recruitment channel" as the corporate daigou are responsible for recruiting and managing resellers. So its more like multi-level marketing. China has regulated the daigou, they need to be registered and pay tax on products sent across the border, so its perfectly legitimate and not smuggling or illegal in any way. People just want to buy the English label products from a buyer they trust so they can be assured of quality and that its not counterfeit product.
The only place that someone might "smuggle" IF in their suitcase out of the country is NZ, because private exports of IF from NZ are banned. In Australia its perfectly legal, and is a huge business. It was estimated that the individual daigou (supermarket buyers) in Australia earned $125k plus a year doing it. Border shutdowns have swung the balance from Australian daigou to corporate daigou supplying Chinese resellers.
https://www.afr.com/companies/retail/australian-companies-urged-to-harness-daigou-power-20171128-gzum6m
https://en.wikipedia.org/wiki/Daigou
Quote from: Ferg on Sep 01, 2022, 07:25 PMhttps://en.wikipedia.org/wiki/Daigou
Doesnt apply to IF. Physical travel works for those coming to buy thousands of dollars worth of luxury items (like handbags, clothes, watches, jewellery etc and is why all those luxury boutiques exist in places like NZ) but its not going to be profitable to pay for an airline fare just to stick a few tins of IF in your luggage. Plus IF is not a one off purchase, its a regular purchase for several years - so who is going to rely on someone travelling to and from Australia to buy their IF for them? Daigou for IF is far more commercial (as it has to be) and does not involve people smuggling it in their suitcases. The majority of daigou in Australia operate through agents now, who organise the shipping, registration and taxes.
(https://2v9ljb1q29v32lhzl42l5g76-wpengine.netdna-ssl.com/wp-content/uploads/2021/05/daxue-consulting_Daigou-in-China_graph-1-768x452.jpg)
Adding to KW's comments, the following recent SMH article by Jessica Yun underlines the importance of the Daigou Channels for A2 Milk.
https://www.smh.com.au/business/companies/turning-a-corner-a2-milk-retargets-chinese-daigous-amid-134m-share-buyback-20220829-p5bdh4.html
Quote from: Left Field on Sep 02, 2022, 11:41 AMAdding to KW's comments, the following recent SMH article by Jessica Yun underlines the importance of the Daigou Channels for A2 Milk.
https://www.smh.com.au/business/companies/turning-a-corner-a2-milk-retargets-chinese-daigous-amid-134m-share-buyback-20220829-p5bdh4.html
As A2 is finding out, marketing is expensive when you have to do it yourself. Far cheaper to let the daigou and agents like AZ Global do it for you. The difference is having margins in the 30%+ range, or 13%.
Quote from: KW on Sep 02, 2022, 12:48 PMAs A2 is finding out, marketing is expensive when you have to do it yourself. Far cheaper to let the daigou and agents like AZ Global do it for you. The difference is having margins in the 30%+ range, or 13%.
Interestingly that having AZ Global (Mr.Zhang) as A2 biggest daigou customer did not help them with their margin in FY21 which was 10%. So, I suspect it's not that quite simple.
Btw, not quite sure what this talk about daigou is all about. DB clearly stated they are all in favor of diagous. They just don't need ticket clippers like Mr.Zhang in the middle.
Interesting. So there is no link between the collapse in daigou sales and the closing of borders to travellers?
Quote from: Ferg on Sep 02, 2022, 06:14 PMInteresting. So there is no link between the collapse in daigou sales and the closing of borders to travellers?
More that the borders closed and there were no international students or temporary migrants coming in (the usual source of daigou), while those in the country had to leave when they lost their job or their visa ran out (unlike NZ, Australia did not extend visas or provide welfare support to them).
And of course, global shipping was completely disrupted and nobody wanted to buy IF if it took 3 months for it to arrive. China was also claiming that covid was coming in on international goods so were holding them up in warehouses for months for "testing". Consequently demand from China dried up, along with those available to supply it.
It remains to be seen if Chinese demand for imported IF will go back to what it was, now that they have had almost 3 years of buying domestic products. A lot of the Chinese daigou in China switched from being sellers of imported IF to becoming social media influencers promoting domestic IF.
Quote from: KW on Sep 03, 2022, 11:47 AMMore that the borders closed and there were no international students or temporary migrants coming in (the usual source of daigou), while those in the country had to leave when they lost their job or their visa ran out (unlike NZ, Australia did not extend visas or provide welfare support to them).
And of course, global shipping was completely disrupted and nobody wanted to buy IF if it took 3 months for it to arrive. China was also claiming that covid was coming in on international goods so were holding them up in warehouses for months for "testing". Consequently demand from China dried up, along with those available to supply it.
It remains to be seen if Chinese demand for imported IF will go back to what it was, now that they have had almost 3 years of buying domestic products. A lot of the Chinese daigou in China switched from being sellers of imported IF to becoming social media influencers promoting domestic IF.
I take it as you did not read a2's report and did not listen investor call and it looks like your "analysis" is based on media and analysts reports headlines at best
Quote from: CG on Sep 03, 2022, 04:27 PMI take it as you did not read a2's report and did not listen investor call and it looks like your "analysis" is based on media and analysts reports headlines at best
Or the reports of all the other listed ASX and US companies who utilise the daigou trade or are actual daigou ::)
Quote from: KW on Sep 04, 2022, 10:03 AMOr the reports of all the other listed ASX and US companies who utilise the daigou trade or are actual daigou ::)
Quite a few of your last posts were all about daigou. daigou this, daigou that. First you were implying not working with daigou is bad, now you are saying working with daigou is bad, be a daigou even worse (are you implying A2 is a daigou company, whatever that means?) and you are not interested in companies that work with them, which is kind of funny as you are a big fan of BUBS who is using daigou more than anyone. So, you invest in them and don't read their reports either? :) You need to make up your mind. But any way your reply just confirmed my suspicions that you have no clue about A2 milk.
Quote from: CG on Sep 04, 2022, 07:49 PMQuite a few of your last posts were all about daigou. daigou this, daigou that. First you were implying not working with daigou is bad, now you are saying working with daigou is bad, be a daigou even worse (are you implying A2 is a daigou company, whatever that means?) and you are not interested in companies that work with them, which is kind of funny as you are a big fan of BUBS who is using daigou more than anyone. So, you invest in them and don't read their reports either? :) You need to make up your mind. But any way your reply just confirmed my suspicions that you have no clue about A2 milk.
Where did I say that working with daigou is bad? Or that I'm not interested in companies that use them? I think your comprehension skills need some work mate. I understand A2 inside and out, have been a shareholder since they were 50c a share, and I sold A2 my shares because there are fundamental issues with A2 that have not been sorted out (related to both their product and their distribution) and these were visible long before Covid. So yes, I've moved on to BUB.
Quote from: CG on Sep 04, 2022, 07:49 PMQuite a few of your last posts were all about daigou. daigou this, daigou that. First you were implying not working with daigou is bad, now you are saying working with daigou is bad, be a daigou even worse (are you implying A2 is a daigou company, whatever that means?) and you are not interested in companies that work with them, which is kind of funny as you are a big fan of BUBS who is using daigou more than anyone. So, you invest in them and don't read their reports either? :) You need to make up your mind. But any way your reply just confirmed my suspicions that you have no clue about A2 milk.
CG - you've just been 'told off' by KW - if I was you I'd take KW's comments on board
KW has been around for ages and is a very successful and respected investor - I've found it very useful listening to people like that.
Quote from: Ferg on Sep 02, 2022, 06:14 PMInteresting. So there is no link between the collapse in daigou sales and the closing of borders to travellers?
I think the biggest problem with closing the borders and there being no tourist travellers was that shut down air freight as well. No passengers means no planes, and no planes means no ability to air freight goods to customers. Which is the kiss of death for a perishable product for a consumer that literally will die if their food doesnt arrive on time. As China is still in its "zero covid" phase, I'm thinking that air traffic will still be down substantially, which means air freight availability is still limited.
Quote from: winner (n) on Sep 05, 2022, 09:48 AMCG - you've just been 'told off' by KW - if I was you I'd take KW's comments on board
KW has been around for ages and is a very successful and respected investor - I've found it very useful listening to people like that.
+1. This hound dog would think very, very long and very hard before taking the opposite side to any position KW takes.
Quote from: winner (n) on Sep 05, 2022, 09:48 AMCG - you've just been 'told off' by KW - if I was you I'd take KW's comments on board
KW has been around for ages and is a very successful and respected investor - I've found it very useful listening to people like that.
Have you ever heard expression "You shall not make for yourself an idol"?
Quote from: KW on Sep 05, 2022, 09:40 AMWhere did I say that working with daigou is bad? Or that I'm not interested in companies that use them? I think your comprehension skills need some work mate. I understand A2 inside and out, have been a shareholder since they were 50c a share, and I sold A2 my shares because there are fundamental issues with A2 that have not been sorted out (related to both their product and their distribution) and these were visible long before Covid. So yes, I've moved on to BUB.
Didn't you write "Or the reports of all the other listed ASX and US companies who utilise the daigou trade" on my statement that you did not read A2's report? Ignoring company's report is quite an interesting way to say - I'm interested in companies who work with daigou and analyze its business. My comprehension skills allowed me to build very successful career and retire at somewhat young age quite awhile ago and live on my investments. So, I'll keep it as it is for now.
"So yes, I've moved on to BUB" - does not look like since you are still hanging around
Quote from: CG on Sep 05, 2022, 03:58 PMDidn't you write "Or the reports of all the other listed ASX and US companies who utilise the daigou trade" on my statement that you did not read A2's report? Ignoring company's report is quite an interesting way to say - I'm interested in companies who work with daigou and analyze its business. My comprehension skills allowed me to build very successful career and retire at somewhat young age quite awhile ago and live on my investments. So, I'll keep it as it is for now.
"So yes, I've moved on to BUB" - does not look like since you are still hanging around
no, you said I got my info from reading the media, and I replied that I get my info from reading other companies reports. do you understand now?
Quote from: KW on Sep 05, 2022, 04:58 PMno, you said I got my info from reading the media, and I replied that I get my info from reading other companies reports. do you understand now?
Yes, that was a secondary part of my statement and I was expecting reply for the primary one. Anyway, I apologize for this misunderstanding.
A temporary boost for SML and ATM.....( A2 SAMR renewed until Feb 2023)
https://www.nzx.com/announcements/398607
As noted in the Company's FY22 results announcement on 29 August 2022, a2MC's current China label IMF product registration was due to expire in late September 2022. As anticipated, Synlait has received notification from SAMR that the current registration has been renewed. In effect, this will allow Synlait to manufacture a2MC's current registered China label product until 21 February 2023 when transition to the new GB standard is required. Product manufactured up until this date is allowed to be sold in market after that date.
New GB registration process
a2MC and Synlait are also working closely together in relation to the registration of a2MC's China label IMF products, formulated in line with China's new GB standards. While this is also progressing, timing is uncertain and remains subject to SAMR approval.
Quote from: Left Field on Sep 12, 2022, 11:18 AMA temporary boost for SML and ATM.....( A2 SAMR renewed until Feb 2023)
https://www.nzx.com/announcements/398607
As noted in the Company's FY22 results announcement on 29 August 2022, a2MC's current China label IMF product registration was due to expire in late September 2022. As anticipated, Synlait has received notification from SAMR that the current registration has been renewed. In effect, this will allow Synlait to manufacture a2MC's current registered China label product until 21 February 2023 when transition to the new GB standard is required. Product manufactured up until this date is allowed to be sold in market after that date.
New GB registration process
a2MC and Synlait are also working closely together in relation to the registration of a2MC's China label IMF products, formulated in line with China's new GB standards. While this is also progressing, timing is uncertain and remains subject to SAMR approval.
This extension was well flagged. It would have been a bloodbath for the stock if it had surprised the other way.
Steady progress by ATM, confirming Chinese market's key partnership through to 2027.
https://www.nzx.com/announcements/399817
The a2 Milk Company (a2MC, the Company) is pleased to advise that it has renewed its exclusive import and distribution arrangements with China State Farm Agribusiness Holding Shanghai Co., Ltd (CSFA) for a term of five years from 1 October 2022.
CSFA has been a2MC's strategic distribution partner in China since 2013 and is the exclusive import agent for a2MC's China label products, including a2 至初® China label infant milk formula.
CSFA is a wholly owned subsidiary of China National Agriculture Development Group Co, Ltd (CNADC), which is also the parent company of China Animal Husbandry Group (CAHG), which holds a 25% interest alongside a2MC's 75% interest in Mataura Valley Milk (MVM) located in Southland, New Zealand.
The a2 Milk Company's Managing Director and CEO, David Bortolussi said:
• "We are pleased that our long-standing arrangements with China State Farm have been renewed for a term of five years through to the end of September 2027. "
I guess this is about as unexpected as day following night or the outcome of any AGM vote about management paying the auditors ...
It is basically saying that Shanghai City Holding will continue to buy the products from Shanghai City Holding. Don't forget - they minority own and majority control Synlait and they have as well an interest in Mataura Valley Milk.
What a surprise they continue to buy their own products! Well down ATM, I recon they had to negotiate really hard.
More interesting will be how they plan to circumvent the export ban after Xi's war in Taiwan has started ...
Having this long term agreement in place and now extending it to 2027, bodes well for the SAMR approval process that needs to be obtained by Feb 2023.
Another brick in the wall.
share buyback starts from today...imagine they'll do it on the ASX mainly as its more liquid over there
What's this Care A2 Plus that's looking at an IPO in OZ - all the rage on Hot Copper which I can't see because banned for life over there
NBR had a story about. Tim Hunter made this comment -
On current form, NZX-listed A2 Milk will not be quaking in its boots about Care A2 Plus specifically, but the wider problem is whether its arrival signals the ultimate commoditisation of A2 products, eroding the aura of exclusivity and margins along with it.
A2 Milk will be focused on maintaining the pecking order.
Quote from: winner (n) on Oct 28, 2022, 01:18 PMWhat's this Care A2 Plus that's looking at an IPO in OZ - all the rage on Hot Copper which I can't see because banned for life over there
....
A2 Milk will be focused on maintaining the pecking order.
Here's the company's web site; https://carea2plus.com
The difference seems to be A2 plus lactoferrin to "have the same nutritional profile as human milk."
Has FDA approval to supply the USA Market from July 2022.
Could be seen to be paving the way for ATM to enter the USA with IF (when MVM up and running) and then maybe some legal action?? .....
Whatever..... it all helps grow the total A2 market in the meantime.
Quote from: winner (n) on Oct 28, 2022, 01:18 PMWhat's this Care A2 Plus that's looking at an IPO in OZ - all the rage on Hot Copper which I can't see because banned for life over there
NBR had a story about. Tim Hunter made this comment -
On current form, NZX-listed A2 Milk will not be quaking in its boots about Care A2 Plus specifically, but the wider problem is whether its arrival signals the ultimate commoditisation of A2 products, eroding the aura of exclusivity and margins along with it.
A2 Milk will be focused on maintaining the pecking order.
Care A2 got FDA permission to import IF into the US during the emergency crisis, but it ended up never shipping anything. It said it was developing a special formula product for the US market, but the FDA said if they did that then they would lose their EUA and would have to reapply for permission to import and start from scratch. So likely not ever going to happen.
Both BUBS and Bellamys have A2 infant formulas. Its already a commodity product. In fact A2 Milk is now lagging behind Bellamys in the premium segment as the Bellamys A2 infant formula is also organic. All of BUBS goat milk formulas are also A2 in addition to their A2 cows milk formula.
https://bellamysorganic.com.au/shop-online/formula/beta-genica-a2-formula/beta-genica-8-step-1-infant-formula/
https://www.bubsaustralia.com/collections/bubs-supreme
Aptamil have also gone ultra-premium with an organic A2 range. The price is $60 a tin (!) compared to $40-$42 for the other three A2 brands.
https://nutricia.com.au/aptamil/products/aptamil-essensis-1/#
Agree 100% KW that its just another commodity now.
The strange thing is it still trades on the same near 30 forward PE it did back many years ago in the good old days when sales and earnings were both growing strongly under Geoff Babbage's leadership. Not just that but you could very easily make the case the company had much better and more focused leadership under Geoff Babbage than the current CEO and there was far less competition to boot and what's more back then they were making headway based on first mover advantage. Go figure on the forward metrics now considering the much different operating environment including much worse potential geopolitical risk ?
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/ (FY23 consensus PE 28.2)
Always looking at high growth company's growth rates .... and a thing called growth rate of decay
Anyway below is A2 annual growth (as at end of each half year) since 2015
Was high growth until disaster struck .... sort of reverted to long term trend (down) and from here growth rate is declining.
Years out to F26 based on their recent stated ambition of reaching $2 billion revenues by FY26 ..... CAGR 7% from current level. So not my guess lol)
Maybe should be seen in light of basil saying A2 still on a PE of about 30
000a2g.JPG
Useful filter I use to find growth stocks that offer genuine value is no growth PE of 8, (this figure varies depending on the 10 year Govt stock rate) + 1g where g is the expected eps growth rate for the next 5 years. On that basis if we're talking an expected CAGR of 7% I would think this would pique my interest on a forward PE of about 15. 15 x expected eps for FY23 of 21 cents = $3.15.
Quote from: Basil on Oct 28, 2022, 05:33 PMUseful filter I use to find growth stocks that offer genuine value is no growth PE of 8, (this figure varies depending on the 10 year Govt stock rate) + 1g where g is the expected eps growth rate for the next 5 years. On that basis if we're talking an expected CAGR of 7% I would think this would pique my interest on a forward PE of about 15. 15 x expected eps for FY23 of 21 cents = $3.15.
My bad basil ...their ambition is revenue 8.5% pa and to improve margins.
So profit growth could be 10% pa
So maybe PE of 18 should be in your calcs ....share price $3.78
That's better eh
Talk of share buy back ..that should help as well
Thanks Winner. The current share price makes no sense to me for a moderate growth mature company that's lost its first mover advantage. Notice how all the skiting about their IP and how they could protect it stopped a few years back. Agree the share price should start with $3 something...maybe flick me a PM when it goes under $3.80 and I'll have another look. Its not like anyone is enjoying any dividend yield in the meantime while they recover at a very moderate pace. Speaking of that I wonder if they will ever pay a dividend ?
So 2 taking legal action against that Care A2 Plus outfit
Quote from: winner (n) on Nov 02, 2022, 10:06 AMSo 2 taking legal action against that Care A2 Plus outfit
A smart move which won't help Care A2's planned IPO.
BTW NZ's recent export stat's and T Mall sales are looking v good for ATM. Next update could be v interesting.
FDA approval to sell A2 IF into USA.
https://www.directbroking.co.nz/DirectTrade/dynamic/announcement.aspx?id=6190276
Another brick in the wall and also good to see ATM taking a cautious approach.
SP up around 6% on the news. Naaaice.
Cool eh Leftie
Good pathway for greater success in the US
You'd hope that hey would get a more ambitious with their $2 billion sales target ---- like in FY2024 and draw itout to FY2026
Quote from: winner (n) on Nov 03, 2022, 02:59 PMCool eh Leftie
Good pathway for greater success in the US
You'd hope that hey would get a more ambitious with their $2 billion sales target ---- like in FY2024 and draw itout to FY2026
Very Cool.
Reckon they will use MVM to supply IF to the US as their margins will be better. MVM still a work in progress and much work to do to get their labs and quality control into place.
However in the longer term 2024 and beyond it will be great for ATM to be diversified into 2 HUGE markets, China and USA.
Crikey by then USA may well have joined the ITP PP free trade thingy to further help ATM's margins!
Quote from: winner (n) on Nov 03, 2022, 02:59 PMCool eh Leftie
Good pathway for greater success in the US
You'd hope that hey would get a more ambitious with their $2 billion sales target ---- like in FY2024 and draw itout to FY2026
They still need to secure a distribution agreement with the IF retailers. Hopefully the ones they work with for fresh milk will also be happy to give them shelf space. You can also factor in a lot of money for marketing expenses to build up the brand - that doesnt come cheap, which is why BUBs raised $60M.
Danone also got the FDA licence for Aptamil.
This is probably to replace the Care A2 product which never got shipped.
From Wordplayer on HC
"Contrary to what a lot of people seem to expect, the US market will be tough and low margins. I think it may prove damaging to some of the smaller competitors who got in early and threw all the stock they could produce at it.
With some existing brand recognition, distribution networks, decent supply, and cash reserves, I think A2M is better positioned then most to capitalise in the long run though."
From Wordplayer - "With some existing brand recognition, distribution networks, decent supply, and cash reserves, I think A2M is better positioned then most to capitalise in the long run though."
He's good with words that Wordplayer
Spot on though ....esp the cash reserves bit
Quote from: winner (n) on Nov 03, 2022, 04:23 PMFrom Wordplayer - "With some existing brand recognition, distribution networks, decent supply, and cash reserves, I think A2M is better positioned then most to capitalise in the long run though."
He's good with words that Wordplayer
Spot on though ....esp the cash reserves bit
The other point made on HC is the value of this deal to Synlait, who currently are using their excess capacity to churn out low margin milk powder.
Press article on ATM and FDA approval to supply the USA market.
http://www.foodanddrinkbusiness.com.au/news/a2-milk-company-gets-us-go-ahead
I like this part (and didn't fully appreciate SML had so much short term capacity.)
"A2 Milk said products for the US will need to be manufactured as there is not enough i its current inventory. The company had told the FDA that if approval was granted by 30 September, it would have capacity through Synlait Milk to manufacture nine million cans of a2 Platinum by 30 June 2023."
Long term gets even more interesting when Mataura Valley comes on on stream.
Nice to see ATM beginning it's share buy back today at around $6.20
Seems ATM have faith in their future.
should not this stock come with a health warning?
dairy price softness forecast by aussi traders on Asia CNBC and apparently the KIWI is expensive...
they think the NZ economy is headed for recession..?
Quote from: Waltzing on Nov 08, 2022, 04:46 PMshould not this stock come with a health warning?
Well some posters here (and over there) were forecasting a low SP of $NZ 2:00 to $3:00 so they might agree with you Waltzing.
However....
ATM's SP is up over 40% up on its 12 month lows..... and
In the competitive China IF market A2 is currently ranked second best performing brand in the annual T-Mall 11/11 sales promotion.
Then the huge USA market is beckoning..... as is the target of annual sales of $2 Billion.
The 18 Nov ASM update is going to be interesting.
Well for the betterment of NZX lets hope so becuase the last govt has done nothing for the market and the country badlt needs more listed companies.
maybe we could privatise the government including the buidling..
like in Margin Call...
"Sell the lot, today....."
Market seems to approve of this appointment today (up around 4c amongst a sea of red.)
https://www.nzx.com/announcements/402090
The a2 Milk Company ("a2MC" or the "Company") is pleased to announce the appointment of Chopin Zhang as Chief Supply Chain Officer to lead a2MC's end-to-end supply chain in all categories and markets.
David Bortolussi, Managing Director and Chief Executive Officer of a2MC, said, "We are pleased to appoint Chopin at such an important time as we transform our supply chain to enable further market access, innovation and growth. This will be achieved through investing in Mataura Valley Milk and acquiring additional manufacturing capability in New Zealand and China with the support of our strategic partners......"
Change of Chairperson announced...... looks good to me
https://www.nzx.com/announcements/402600
The a2 Milk Company ("a2MC" or the "Company") is today hosting its Annual Meeting in Auckland, New Zealand. During his address to shareholders, David Hearn, Chair of the Board, will announce that he intends to stand down as a Board member and Chair at the next Annual Meeting in November 2023, as he comes to the natural end of his term as a Director after nine years on the Board.
As a result, and in order to ensure a smooth transition, the Board has spent significant time recently considering the best replacement for the Chair. After that due consideration the Board has come to the unanimous conclusion that Pip Greenwood, who has been on the Board for over three years, has both the skills and importantly the experience to take over from David Hearn at that time.
A company that's never paid a dividend is buying back its own shares on a forward PE of 31.5 times because the directors think this is the best use of capital and we can trust them that they know what they're doing based on their ability to forecast out 7-10 years ahead, (which you have to do when buying high PE multiple companies) and are "really good" at predicting the future that far out and we know this because they showed such "remarkable insight" into their own forecasting ability in FY21, just forecasting out a few months they're subject to multiple class action lawsuits. Trust us we know what we are doing...Hmmm.
Quote from: Basil on Nov 18, 2022, 11:31 AMA company that's never paid a dividend is buying back its own shares on a forward PE of 31.5 times because the directors think this is the best use of capital and we can trust them that they know what they're doing based on their ability to forecast out 7-10 years ahead, (which you have to do when buying high PE multiple companies) and are "really good" at predicting the future that far out and we know this because they showed such "remarkable insight" into their own forecasting ability in FY21, just forecasting out a few months they're subject to multiple class action lawsuits. Trust us we know what we are doing...Hmmm.
Let me rephrase that - "we are buying back shares in order to get the share price to where it needs to be for us to collect our bonuses and share options are in the money"
Quote from: KW on Nov 18, 2022, 01:35 PMLet me rephrase that - "we are buying back shares in order to get the share price to where it needs to be for us to collect our bonuses and share options are in the money"
So true
The buyback amount is included in Total Shareholder Return - I asume a key component of the bonus scheme
Pretty tricky eh ....butone of the tricks of the trade
Quote from: winner (n) on Nov 18, 2022, 01:47 PMSo true
The buyback amount is included in Total Shareholder Return - I asume a key component of the bonus scheme
Pretty tricky eh ....butone of the tricks of the trade
And usually its worse, as the value of buybacks only works if the shares bought back are cancelled, however most companies keep them as Treasury stock and then gift them to management or employees through an ESOP or performance shares. So there is no real benefit, other than a straight transfer of wealth from shareholders to employees/management.
Quote from: KW on Nov 18, 2022, 02:06 PMAnd usually its worse, as the value of buybacks only works if the shares bought back are cancelled, however most companies keep them as Treasury stock and then gift them to management or employees through an ESOP or performance shares. So there is no real benefit, other than a straight transfer of wealth from shareholders to employees/management.
Umm the shares bought back are being cancelled by the way.
Seems market not that keen on that veiled downgrade today
Quote from: winner (n) on Nov 18, 2022, 04:42 PMSeems market not that keen on that veiled downgrade today
Not so veiled, EBITDA margins were forecast to improve on last year, and now they wont
Outlook update
• With reference to the Company's full year guidance provided on 29 August 2022, underlying
business performance is on track and broadly consistent with guidance
• Volatility in currency has the potential to impact the shape of the reported results. The recent
relative weakness of the NZD1 has had the effect of inflating both revenue and cost of doing
business (including hedge losses). In addition, increased interest rates in Australia and New
Zealand have improved the Company's return on term deposits (interest income)
• Having regard to year-to-date currency movements and should currency remain at prevailing
levels, full year reported revenue is likely to increase to low double-digit growth compared to
previous guidance of high single-digit growth. The Company also reiterates its guidance that
1H23 growth (on 1H22) is expected to be significantly higher than 2H23 growth (on 2H22)
• EBITDA is expected to remain broadly in line with plan and US IMF is not expected to have a
material impact in FY23. EBITDA margin (% of sales) is expected to be similar to prior year
compared to previous guidance of a modest improvement due mainly to the currency impact
on revenue
Currency headwinds coming ?
This sums up nicely where A2 is heading - maybe ambitions to be the next Fonterrra?
https://www.stuff.co.nz/business/farming/agribusiness/130486306/a2-milk-needs-its-own-dairy-factories-heard-says
Shiny stainless steel costing hundreds of millions of dollars changes how the market will see A2 over time and how its valued.
It probably 'deserved' having lofty valuation multiples when it was a low capital high margin high growth marketing company ,,,, but a capital intensive lower margin producer will never have lofty multiples
Will take a few years to evolve but it'll happen
No doubt A2 spending $288m on their Synlait stake makes good 'strategic sense'
But that $289m is only worth $127m now - under water by $162m (down 56%) ..... but no worries its only money.
Just as well they put the 'adjustments' in Other Comprehensive Income' and not the main Profit and Loss -- make reported profit a bit sick.
Ukraine affecting sunflower oil production
An impending problem for A2
Quote from: winner (n) on Nov 28, 2022, 08:06 AMUkraine affecting sunflower oil production
An impending problem for A2
I didn't realise they are milking sunflowers. Are they?
Quote from: BlackPeter on Nov 28, 2022, 12:20 PMI didn't realise they are milking sunflowers. Are they?
Apparently a key ingredient in infant formula
Quote from: winner (n) on Nov 28, 2022, 12:23 PMApparently a key ingredient in infant formula
cheers - interesting. Always learning :) ;
Crikey, ATM reached $7.00 in late trading on Friday.
I guess helped by Fonterra's upgrade? https://www.nzx.com/announcements/403744
Anyway......ATM up around 60% in last 6 months. A rare recent success story in a tough market.
Holding above $7:00. Closed today up another 2% to $7.16 on reasonable volumes.
Possible impetus is the lifting of Covid restrictions in China.
Another good day....... up 2.5% to $NZ7.34
Looks like the ASX is heading to $A7:00 as the next target.
ASX closed up 4.21% to $A 6.93
ATM now up about 70% from recent lows.
From HC - it appears a major competitor to ATM in the Chinese market is withdrawing...
Here's a translation of edited parts of the Chinese article.
"At noon on December 14, according to related reports, Abbott Nutrition announced a business adjustment, gradually stopping the operation and sales of infant and children's nutrition products in the Chinese mainland market.
"In the next year, we will cooperate with all relevant parties to gradually stop our Abbott infant and children's nutrition products business in the Chinese mainland market."
Why did Abbott suddenly make such a decision?
"The first reason is that Abbott has had too many brand negatives in recent years, which has caused significant damage to the brand attributes in the minds of Chinese consumers....
The second point is that Abbott has not been very successful in its marketing plan in recent years. .... its market share has been declining.
The third point is the milk powder safety incident this year, which had a great impact on Abbott's formula registration in China, which is also an important reason why Abbott had to withdraw from the Chinese market. "
Quote from: Left Field on Dec 16, 2022, 12:26 PMFrom HC - it appears a major competitor to ATM in the Chinese market is withdrawing...
Here's a translation of edited parts of the Chinese article.
"At noon on December 14, according to related reports, Abbott Nutrition announced a business adjustment, gradually stopping the operation and sales of infant and children's nutrition products in the Chinese mainland market.
"In the next year, we will cooperate with all relevant parties to gradually stop our Abbott infant and children's nutrition products business in the Chinese mainland market."
Why did Abbott suddenly make such a decision?
"The first reason is that Abbott has had too many brand negatives in recent years, which has caused significant damage to the brand attributes in the minds of Chinese consumers....
The second point is that Abbott has not been very successful in its marketing plan in recent years. .... its market share has been declining.
The third point is the milk powder safety incident this year, which had a great impact on Abbott's formula registration in China, which is also an important reason why Abbott had to withdraw from the Chinese market. "
Maybe that's what caused the bounce over the last couple of days - though I see its settling back a bit today
Seems like Abbott have been having a lot of problems lately
From a TA perspective ATM's SP looks to be on an uptrend. That's Good.
China opening up for 'business' again after lockdowns. That's Good.
China yet to face the reality of illness, deaths and a rampant Covid. That's not good.
Ssssooo it's not all rosey for ATM, and SP is likely to bounce around somewhat in the short term. Long term the trend is our friend.
He said hopefully ;)
Recent research validates what many ATM holders already know.....
https://academic.oup.com/jn/article-abstract/151/5/1061/6165053?redirectedFrom=fulltext
Abstract
"Acute-feeding and multiple-day studies have demonstrated that milk containing A2 β-casein only causes fewer symptoms of lactose intolerance (LI) than milk containing both A1 and A2 β-caseins. We conducted a single-meal study to evaluate the gastrointestinal (GI) tolerance of milk containing different concentrations of A1 and A2 β-casein proteins. This was a randomized, double-blind, crossover trial in 25 LI subjects with maldigestion and an additional eight lactose maldigesters who did not meet the QLCSS criteria. Subjects received each of four types of milk (milk containing A2 β-casein protein only, Jersey milk, conventional milk, and lactose-free milk) after overnight fasting. Symptoms of GI intolerance and breath hydrogen concentrations were analyzed for 6 h after ingestion of each type of milk. In an analysis of the 25 LI subjects, total symptom score for abdominal pain was lower following consumption of milk containing A2 β-casein only, compared with conventional milk (p = 0.004). Post hoc analysis with lactose maldigesters revealed statistically significantly improved symptom scores (p = 0.04) and lower hydrogen production (p = 0.04) following consumption of milk containing A2 β-casein only compared with conventional milk. Consumption of milk containing A2 β-casein only is associated with fewer GI symptoms than consumption of conventional milk in lactose maldigesters."
And if the research isn't enough; ATM has launched fresh lactose milk in Australia.
Quote from: Left Field on Dec 20, 2022, 02:42 PMRecent research validates what many ATM holders already know.....
https://academic.oup.com/jn/article-abstract/151/5/1061/6165053?redirectedFrom=fulltext
Not sure whether holding the shares improves the memory. Does it? Otherwise, yes, it does sound like another confirmation that A2 milk seems to have some benefits to some people. We all assumed that, didn't we?
Not quite sure though, why this recognition would be of particular benefit for the A2 company. Everybody can sell A2 milk (and everybody does). No IP. Its like discovering that eating pizza reduces hunger (which is good as well), but does this make RBD rich?
BP, FYI simply not correct to say ATM has "no IP".
Here's a sample from the last FY22 accounts which shows the value of their IP and R&D increasing over past years.
Trademarks are allocated to the following cash generating units (CGUs) for the purpose of impairment testing: Australia and New Zealand $304,000 (2021: $283,000); China and Other Asia $3,436,000 (2021: $3,376,000); USA $165,000 (2021: $153,000). During the year the total value of research and development costs expensed was $4,389,000 (2021: $2,506,000)........
Just saying....
(FWIW I recall ATM fighting (and winning) several past IP legal battles in Australia. Not sure of the status of their current USA case.)
Quote from: Left Field on Dec 21, 2022, 11:01 AMBP, FYI simply not correct to say ATM has "no IP".
Here's a sample from the last FY22 accounts which shows the value of their IP and R&D increasing over past years.
Trademarks are allocated to the following cash generating units (CGUs) for the purpose of impairment testing: Australia and New Zealand $304,000 (2021: $283,000); China and Other Asia $3,436,000 (2021: $3,376,000); USA $165,000 (2021: $153,000). During the year the total value of research and development costs expensed was $4,389,000 (2021: $2,506,000)........
Just saying....
(FWIW I recall ATM fighting (and winning) several past IP legal battles in Australia. Not sure of the status of their current USA case.)
OK - they do have some IP - as far as I am aware related to the herd testing of A2 cows.
That's good.
What I meant is:
- Anybody can hold and breed A2 cows without asking them and without infringing their IP.
- Anybody can test their cows for A2 (though it might be a bit more expensive without the ATM patent, but you only need to do that once per cow or if you know you have an A2 herd, you don't need to do that at all.
- Anybody can and is allowed to sell their A2 milk as A2 milk without infringing their IP.
ATM's "IP" moat is as effetive as the moat around a castle filled with soil.
Glad to see you now agree that ATM does have some IP.
Perhaps you also will agree that ATM has considerable Trade Mark protection that has already won legal cases, particularly in the Australian market.
Perhaps you will also agree that Trade Marks can be very valuable, just ask Coca Cola in an industry where many other competitors can make a 'cola."
Perhaps you will one day understand why Fonterra has licensed the A2 Brand in NZ.
But perhaps not.
Quote from: Left Field on Dec 21, 2022, 05:12 PMGlad to see you now agree that ATM does have some IP.
Perhaps you also will agree that ATM has considerable Trade Mark protection that has already won legal cases, particularly in the Australian market.
Perhaps you will also agree that Trade Marks can be very valuable, just ask Coca Cola in an industry where many other competitors can make a 'cola."
Perhaps you will one day understand why Fonterra has licensed the A2 Brand in NZ.
But perhaps not.
Amazing ... softly falls the condescenison ;P . You clearly try to tune into the spirit of the season, but it appears you have got an attitude problem.
Look - I am sorry for you if you lost heaps with ATM (as many investors did) ... but you won't fix this issue by pointing aggression and arrogance towards other posters. Behaviour like that won't ramp the share price up, it only might kill a sensible discussion and take others an opportunity to learn.
Anyway. I hope at some stage the spirit of Christmas will meet you as well.
Related to your "argument"- have a good read of the ATM thread on the other forum and thatn go over to hotcopper. No fun, but maybe a useful reading for the quiet time. All your "arguments" have been already boosted when ATM's shareprice was 3 times of what it is today (and this is not a long time ago). Neither these arguments nor the absolute arrogance and aggression of some other posters on sharetrader and hotcopper did help to keep the share price up, it just made everybody feeling miserable.
Have a good life.
Quote from: BlackPeter on Dec 22, 2022, 09:22 AMLook - I am sorry for you if you lost heaps with ATM (as many investors did) ...
.....Have a good life.
You now claim I lost heaps with ATM.
I got the abacus out and here's how my investment in ATM has worked out FYI.
In the last 12 months ATM's SP low was $4.20. Yesterday it closed at $7.10 That's a gain of 69% in 2022. During the same time the NZX fell 11.8%
I first purchased ATM in Jan 2013 at .53c a share. At yesterday's close of $7.10 my 'loss' as you claim, is actually a gain of 1,239% .
Thus on an annual basis over the last 10 years ATM has yielded me a 123% pa SP growth.
I appreciate that some investors who purchased ATM at higher prices may currently be in a loss situation, and as a long term investor I understand the pain. However all investing is about DYOR and taking responsibility for your own decisions.
I wish you well and merely wanted to correct some of the incorrect statements you have made re ATM's IP and my investments.
I'll say no more now on this topic and wish you a happy life too.
Quote from: Left Field on Dec 22, 2022, 09:55 AMYou now claim I lost heaps with ATM.
I got the abacus out and here's how my investment in ATM has worked out FYI.
In the last 12 months ATM's SP low was $4.20. Yesterday it closed at $7.10 That's a gain of 69% in 2022. During the same time the NZX fell 11.8%
I first purchased ATM in Jan 2013 at .53c a share. At yesterday's close of $7.10 my 'loss' as you claim, is actually a gain of 1,239% .
Thus on an annual basis over the last 10 years ATM has yielded me a 123% pa SP growth.
I appreciate that some investors who purchased ATM at higher prices may currently be in a loss situation, and as a long term investor I understand the pain. However all investing is about DYOR and taking responsibility for your own decisions.
I wish you well and merely wanted to correct some of the incorrect statements you have made re ATM's IP and my investments.
I'll say no more now on this topic and wish you a happy life too.
I did not claim you lost heaps with ATM.
I said "Look - I am sorry for you
if you lost heaps with ATM"
Maybe you do some research into the meaning of the little word "if" before you continue to spread misinformation and non-sense.
Well that's all put a downer on the Christmas spirit.
Quote from: Minimoke on Dec 22, 2022, 10:41 AMWell that's all put a downer on the Christmas spirit.
He does that. Lucky for us this site has no negative reps the prickly one likes to dish out, even when he is wrong with what he thinks constitutes a lack of IP.
I think we all need to have a big group hug 8)
ATM and SML in Bell Potter's 2023 picks
https://drive.google.com/file/d/18T_iZ5zWF2_j8xbHbluaVmiK5uaovawm/view
Must say their target SP for ATM of $A6.80 ($NZ 7.30) doesn't excite me much..... must be an error! lol.
Big day for me yesterday. At $7.57 I am now back into my 20% loss comfort zone. I know "you should have sold blah blah blah." but I didn't - so ended up carry large paper loss. This has now shrunk to the point I'll comfortably hold while SP appears to be trending up.
Quote from: Minimoke on Jan 05, 2023, 08:50 AMBig day for me yesterday. At $7.57 I am now back into my 20% loss comfort zone. I know "you should have sold blah blah blah." but I didn't - so ended up carry large paper loss. This has now shrunk to the point I'll comfortably hold while SP appears to be trending up.
Pretty good it's about 80% up from its reçent lows
You'll be in +ve territory before too long
That's the highest A2 has traded since May 2021.
There's been no news to drive this either - other than the confidence booster of Greenwood sinking $200k into a purchase. Anecdotally, sales are recovering quickly in China after the end to lockdowns. Confirmation of that should see the next leg up.
Quote from: Hectorplains on Jan 05, 2023, 09:05 AMThat's the highest A2 has traded since May 2021.
There's been no news to drive this either - other than the confidence booster of Greenwood sinking $200k into a purchase. Anecdotally, sales are recovering quickly in China after the end to lockdowns. Confirmation of that should see the next leg up.
Also positive news on USA. I expect them to be leveraging the Infant Formula approval to create a really strong "trusted" healthy food brand.
Quote from: Minimoke on Jan 05, 2023, 09:17 AMAlso positive news on USA. I expect them to be leveraging the Infant Formula approval to create a really strong "trusted" healthy food brand.
USA ATM office in Boulder Colorado looks pretty sharp...preparing for big things.
https://ozarch.com/our-work/the-a2-milk-company
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
Trading at 36.5 times average analyst FY23 forecasted earnings.
Quote from: Basil on Jan 05, 2023, 05:05 PMhttps://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
Trading at 36.5 times average analyst FY23 forecasted earnings.
If you adjust for their cash mountain and Synlait investment (Andean few less shares from buyback) probably on an 'real adjusted PE' of 25 ..not too bad when simplywallstreet says future growth is about 19% pa
The whole adjust for their cash thing doesn't carry a lot of cred with me.
They need it for their reckless share buy-back and loss making milk processing operations.
Even if you did take $1 off per share for the cash, $730m, that brings the forward PE back to 32, more than it used to trade on in the good old days when it was growing strongly under Geoffry Babbage.
For mine, the share buy-back has already pushed this beyond fair value and momentum traders should be dancing very close to the door.
I don't think simply wall street or share clarity have much cred. I never factor either into any of my investment decisions.
Can't help noticing that the average of 7 analysts price target is $6.59 one year hence and seeing as we all know it's never paid a dividend that suggests on a risk and time value of money basis fair value is somewhere about $6 now. Like I said above, the buy-back has pushed this too far.
Wonder how they are getting on with the class action lawsuits? Best they keep plenty of cash on hand for that just in case😉
Good luck with it mate. (Not trying to start something here but I felt someone needed to bring a dose of realism to this thread).
Quote from: Basil on Jan 05, 2023, 05:40 PM.....the share buy-back has already pushed this beyond fair value and momentum traders should be dancing very close to the door.
Basil might be surprised, but in this instance I tend to agree with him.
ATM has had a good run in 2022 (SP up 60% from the low,) but will SP growth continue at that pace in 2023?
ATM's been buying its own shares back and has done well if their average buy back price is around $5.40, they are currently up over 30%..... but maybe this buyback has inflated the SP recently?
If we also factor in a bit of Covid risk in the Chinese market, there is a chance of slower growth ahead. Plus the likelihood that ATM's launch into the USA IF market will not benefit ATM until FY24.
Accordingly, I suspect the current SP is a bit 'toppy' and has room to retrace up to 20% tho' much will depend on the strength of their next update.
Because of these factors I surprised myself by not picking ATM in the 2023 SP picking competition.
However with ATM currently about 8% of my portfolio I feel I'm 'well positioned' either way.
ATM remains a great long term hold IMHO.
Hey leftie ....share price up 80% from its reçent low ......not your 60%
Pretty cool eh
At 840, which isn't too far away, it be 100% up
Quote from: winner (n) on Jan 06, 2023, 08:10 AMHey leftie ....share price up 80% from its reçent low ......not your 60%
Pretty cool eh
At 840, which isn't too far away, it be 100% up
Just like old times Winner!
Either way..... nice to be 'well positioned.'
Quote from: Left Field on Jan 06, 2023, 08:50 AMJust like old times Winner!
Either way..... nice to be 'well positioned.'
And owning more of the company because of the buyback
Winning all ways eh
I'm looking forward to half year numbers and comments
They said a while ago -'On track to achieve ambition to grow sales to $2 billion and improve EBITDA
margins over time'
After half year I might have to update this chart --- the sales line going to 2 billion in F26
00000a2sales.JPG
Stop posting such nice charts Winner...... you're getting me a tab excited.
(Must say your ATM chart is much nicer than the OCA v SUM chart you posted today..... crikey!)
Bit of excitement in the SP today.
Talk-Less on HC posts...
A2 Platinum Stage 1 & 2 has received a letter of 'Enforcement Discretion' from the USA FDA
This confirms A2's intentions in the USA market and that it is taking steps to transition to more a permanent sales supply arrangement by demonstrating their IF meets approriate US standards.
Another brick in the wall.
Quote from: Left Field on Jan 13, 2023, 03:18 PMBit of excitement in the SP today.
Talk-Less on HC posts...
A2 Platinum Stage 1 & 2 has received a letter of 'Enforcement Discretion' from the USA FDA
This confirms A2's intentions in the USA market and that it is taking steps to transition to more a permanent sales supply arrangement by demonstrating their IF meets approriate US standards.
Another brick in the wall.
Its a long list of companies indicating they intend to stay. Nz's Danone is out. Australis Bubs remains keen
https://www.fda.gov/food/infant-formula-guidance-documents-regulatory-information/enforcement-discretion-manufacturers-increase-infant-formula-supplies
Seems ATM's possible expansion of IF sales into the USA is being encouraged by Forbar.
https://www.rnz.co.nz/news/national/483374/a2-milk-selling-infant-formula-in-us-could-help-improve-its-market-performance
It will be interesting to get ATM's view with their next market update .....
Quote from: Left Field on Jan 31, 2023, 04:45 PMSeems ATM's possible expansion of IF sales into the USA is being encouraged by Forbar.
https://www.rnz.co.nz/news/national/483374/a2-milk-selling-infant-formula-in-us-could-help-improve-its-market-performance
It will be interesting to get ATM's view with their next market update .....
I think it will add to brand recognition and consumer trust. But I would really like to see an addition to profit line
ATM's SP getting some interest today (so far) up about 9c or approx 1%.
According to Carlos G on HC NZ's December stats show the "export of IF and other stuff suitable for infants to China made all time record in terms of value ~ $145 mil in that month. Previous record was ~$129 mil in November 2020. An average for the previous 11 months was ~$82 mil with highest in September ~120 mil..... Seems price per kg also went up quite a bit in December"
A positive step towards the next update.....
The a2 Milk Company ("a2MC") notes the announcement today by Synlait Milk Limited ("Synlait") in relation to the new national standards (GB) registration process for a2MC's China label infant milk formula products.
Synlait has announced that, as part of the registration process, Ministry for Primary Industries ("MPI") will commence the audit process of Synlait's Dunsandel facility on behalf of China's State Administration for Market Regulation ("SAMR") in the week of 20 February 2023.
The Company looks forward to providing a further update when its 1H23 results are released on Monday, 20 February.
Quote from: Left Field on Feb 17, 2023, 10:18 AMA positive step towards the next update.....
The a2 Milk Company ("a2MC") notes the announcement today by Synlait Milk Limited ("Synlait") in relation to the new national standards (GB) registration process for a2MC's China label infant milk formula products.
Synlait has announced that, as part of the registration process, Ministry for Primary Industries ("MPI") will commence the audit process of Synlait's Dunsandel facility on behalf of China's State Administration for Market Regulation ("SAMR") in the week of 20 February 2023.
The Company looks forward to providing a further update when its 1H23 results are released on Monday, 20 February.
Its really just an announcement of an upcoming announcement. There was never any doubt the audit would happen. And I have no doubts they will pass. But the market seems to like the announcement of not very much - up 6% today to $7.70
Quote from: Minimoke on Feb 17, 2023, 01:34 PMIts really just an announcement of an upcoming announcement. There was never any doubt the audit would happen. And I have no doubts they will pass. But the market seems to like the announcement of not very much - up 6% today to $7.70
Agree..... no need to get excited yet. Much better to wait Monday's results update. Still the market is what the market is.
Quote from: Left Field on Feb 17, 2023, 01:43 PMAgree..... no need to get excited yet. Much better to wait Monday's results update. Still the market is what the market is.
They better be good. I've tried two supermarkets and can't get my milk any more. Not impressed! (Though I think Synlait now have their version on the shelves "Meadow fresh" for $7.85 rather an my usual $6.65)
Up 5.9% today to $7.75. Only 3 more sleeps. Monday is going to be very interesting.
(So far my hold firm to bail myself out of a hole seems to be working)
Results out....... I'm happy.... EPS up 24%..... Increased market share in China in a tough time when overall IF mkt down......onwards and upwards.
(Impressive gains in USA fresh milk sales etc)
... and this is v impressive....China & Other Asia sales up 54.0%, while ANZ sales down 24.6%, USA sales up 61.8% and MVM sales up 18.4%
- ChinalabelIMFsalesup 43.5%
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/406946/388833.pdf
• Revenue growth of 18.6% to $783.3 million
- China & Other Asia sales up 54.0%, ANZ sales down 24.6%, USA sales up 61.8% and MVM sales up 18.4%
- IMF sales up 18.0% with China label sales up 43.5% and English label sales up 1.0%3
- Liquid milk sales in ANZ and USA up 5.6% and 62.0% respectively
• EBITDA4 up 10.5% to $107.8 million with an EBITDA to sales margin of 13.8%
• Net profit after tax (NPAT) including amounts attributable to non-controlling interests up 22.1% to $68.5 million with
$73.8 million5 attributable to owners of the Company
• Basic earnings per share up 24.1% to 10.0 cents compared to 8.0 cents in 1H22
• On-market share buyback of up to $150 million commenced in 1H23 and 60.1% complete
• Strong balance sheet with closing net cash6 of $707.2 million
• Outlook for FY23 revenue growth of low double-digit and EBITDA % margin similar to FY22. This is consistent with the prior update at the Company's Annual Meeting of Shareholders
$74m cash profit. Which appears to be basically being spent on the share buy back. So no hole being made in the $700 cash stockpile. Can't be long before they start talking about a dividend.
Have to say I'm pretty impressed with the results in what was said to be very tough trading times.
Quote from: Left Field on Feb 20, 2023, 08:48 AMResults out....... I'm happy.... EPS up 24%..... Increased market share in China in a tough time when overall IF mkt down......onwards and upwards.
(Impressive gains in USA fresh milk sales etc)
... and this is v impressive....China & Other Asia sales up 54.0%, while ANZ sales down 24.6%, USA sales up 61.8% and MVM sales up 18.4%
- ChinalabelIMFsalesup 43.5%
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/406946/388833.pdf
• Revenue growth of 18.6% to $783.3 million
- China & Other Asia sales up 54.0%, ANZ sales down 24.6%, USA sales up 61.8% and MVM sales up 18.4%
- IMF sales up 18.0% with China label sales up 43.5% and English label sales up 1.0%3
- Liquid milk sales in ANZ and USA up 5.6% and 62.0% respectively
• EBITDA4 up 10.5% to $107.8 million with an EBITDA to sales margin of 13.8%
• Net profit after tax (NPAT) including amounts attributable to non-controlling interests up 22.1% to $68.5 million with
$73.8 million5 attributable to owners of the Company
• Basic earnings per share up 24.1% to 10.0 cents compared to 8.0 cents in 1H22
• On-market share buyback of up to $150 million commenced in 1H23 and 60.1% complete
• Strong balance sheet with closing net cash6 of $707.2 million
• Outlook for FY23 revenue growth of low double-digit and EBITDA % margin similar to FY22. This is consistent with the prior update at the Company's Annual Meeting of Shareholders
Market proving a fickle beast today ATM SP down 7% at time of writing.... I guess China market fears still (USA/China relations sinking lower), SAMR registration still not known etc.
That said, I judge the SP will outperform the NZX50 index over the next 12 months, so still a hold for me. Next news should relate to this weeks SAMR process.
Quote from: Left Field on Feb 20, 2023, 01:17 PMMarket proving a fickle beast today ATM SP down 7% at time of writing.... I guess China market fears still (USA/China relations sinking lower), SAMR registration still not known etc.
That said, I judge the SP will outperform the NZX50 index over the next 12 months, so still a hold for me. Next news should relate to this weeks SAMR process.
Seems insiders got the jump on Friday and are now bailing having made their profit.
"I guess China market fears still (USA/China relations sinking lower),"
right of course it is and has been for a few years..
and when Graham starts to sound and act like RR and is now unplugged maybe becuase he thinks Trump is in Trouble and Senator G can now say what ever he likes...
""You have to have actions consistent with that statement," he said. The senator said Ms Harris' comments in Germany were particularly poignant given the historical context. "We're talking about the Vice President of the United States declaring that Russia is involved in crimes against humanity — in Germany of all places, you know, echoes of World War II," he said."
One gun run from China to Serbia and all bets are off...
https://www.telegraph.co.uk/world-news/2023/02/20/train-ukrainian-pilots-f-16-fighters-now-biden-urged/
"This morning, the team at Credit Suisse responded to this infant formula company's half-year results by downgrading its shares to an underperform rating with a [AU]$5.10 price target. Its analysts have concerns that overall infant formula demand could fall materially in China in 2023."
Quote from: KW on Feb 22, 2023, 10:01 AM"This morning, the team at Credit Suisse responded to this infant formula company's half-year results by downgrading its shares to an underperform rating with a [AU]$5.10 price target. Its analysts have concerns that overall infant formula demand could fall materially in China in 2023."
I wonder what their short position is?
Whether it is short term worry about Daigou sales channels or declining Chinese birth rates the big picture is that the in the long term the world is increasingly needing reliable quality supplies of milk protein.
The following USA Census Bureau data reveals that US households continue to struggle to find/purchase adequate supplies of IF;
ATM has some interesting potential ahead of it;
1.) In China - to launch more adult orientated high protein offerings, while consolidating/growing its IF market share.
2.) To reduce reliance on the Chinese market by launching IF and other 'high protein' formulations into the USA
As a result I don't sweat the short term, and still consider ATM a very good long term hold.
The just released update results show ATM is doing very well in the USA (Revenue up 62% with improved profitability)...... and this is just the start.
USA IF difficulties continue.jpg
Interesting ...
So, this is a company where board and management used already many opportunities to demonstrate their incompetence beyond reasonable doubt. Huge political risks hovering over their only sort of profitable market. Market potential shrinking.
Earnings this year (if we are optimistic) might be 20 cents per share (and earnings growth so far negligible - 10 yrs EPS is 15 cents, so yes, it goes upwards ... but very slow ...) and the company holds a war chest of roughly $1 cash per share.
All this amazing beauty is available for a bargain price of only $6.26 per share.
But hold on - if I just keep my $6.26 I have much more money and less risks?
I know, risks are fun .. but personally I could see better ways to burn money.
Anyway - GLTH.
A glimpse of how ATM in the face of declining birth-rate trends in China, is diversifying away from reliance solely on IF.....
In this promotion it is partnering with Lego, targeting young children, with a 'smart nutrition' claim.
Quote from: Left Field on Feb 28, 2023, 12:29 PMA glimpse of how ATM in the face of declining birth-rate trends in China, is diversifying away from reliance solely on IF.....
In this promotion it is partnering with Lego, targeting young children, with a 'smart nutrition' claim.
Does it work?
Quote from: Left Field on Feb 28, 2023, 12:29 PMA glimpse of how ATM in the face of declining birth-rate trends in China, is diversifying away from reliance solely on IF.....
In this promotion it is partnering with Lego, targeting young children, with a 'smart nutrition' claim.
A very clever marketing move ... it uses Lego in the promo to first up grab the attention of young children and steers this intended audience clearly apart from baby IF, then closes the deal with a 'smart nutrition' message to the parent purchaser that they are looking after their growing children's nutritional needs.
It will be interesting to see what they do to develop the adult market. I'm not convinced with positioning A2 milk as a 'high protein' alternative for the adult market. That's already a crowded market with all the nutritional drinks available world-wide.
Some sort of digestive intolerance to cow's milk is reported to be prevalent in 30% of people of Asian origin in all countries and that is a far easier market to penetrate and establish a unique adult product especially given they already have a market message along those lines. It will not be a panacea for all digestive problems, more of a suck it and see situation, but if it works for 10% of those affected that is a huge market - and better than being an also ran 'high protein' drink.
Apologies if this has already been discussed here - I have not read this thread for a long time - not since the sp was $19 - lol!
Quote from: Whome on Feb 28, 2023, 04:08 PMA very clever marketing move ... it uses Lego in the promo to first up grab the attention of young children and steers this intended audience clearly apart from baby IF, then closes the deal with a 'smart nutrition' message to the parent purchaser that they are looking after their growing children's nutritional needs.
It will be interesting to see what they do to develop the adult market. I'm not convinced with positioning A2 milk as a 'high protein' alternative for the adult market. That's already a crowded market with all the nutritional drinks available world-wide.
Some sort of digestive intolerance to cow's milk is reported to be prevalent in 30% of people of Asian origin in all countries and that is a far easier market to penetrate and establish a unique adult product especially given they already have a market message along those lines. It will not be a panacea for all digestive problems, more of a suck it and see situation, but if it works for 10% of those affected that is a huge market - and better than being an also ran 'high protein' drink.
Apologies if this has already been discussed here - I have not read this thread for a long time - not since the sp was $19 - lol!
Hmm - I suppose you realise that A2-milk sold by A2 is from cows as well, that Asians (while more of them are lactose intolerant than Europeans) live quite well without consuming milk (i.e. they are not desperate to change their diet just to make some funny NZ company rich) and that A2 is not more "protein rich" than any other "normal"(A1) milk?
So - what exactly is your point?
Interesting article about the reasons behind China's declining birth rate...... doesn't look like it's going to increase/change anytime soon.
https://www.washingtonpost.com/opinions/2023/02/28/behind-china-collapse-birth-marriage-rates/
With over 700,000 students studying overseas, many of whom dont go back to China, the population of young, well off, fertile Chinese is also shrinking. These students will form families in their newly adopted country, not China.
Quote from: BlackPeter on Feb 28, 2023, 05:58 PMHmm - I suppose you realise that A2-milk sold by A2 is from cows as well, that Asians (while more of them are lactose intolerant than Europeans) live quite well without consuming milk (i.e. they are not desperate to change their diet just to make some funny NZ company rich) and that A2 is not more "protein rich" than any other "normal"(A1) milk?
So - what exactly is your point?
I do realise A2 milk is from cows. I managed to remember that from when I first bought ATM shares at 9cents, that cents with a 'sis', and that was a wee while ago ....
... And for technical correctness, pls note the A2 point of difference has nothing to do with lactose ...
... and back in the halcyon days, Chinese mothers were desperate to change the diet of their babies to a brand of IF that did not harm them from melamine contaminated home product that led to the meteoric rise in the popularity of NZ origin IF ...
... and yes, you are right that A2 is not more protein rich than normal milk, so why would you market A2 to adults in competition with protein enriched sports drinks.
My point - I was looking at the future direction of A2 after the savaging of the share price in recent years and their proposal to transition from a single product company to one that developed promotions to appeal to different market segments and the consequent forecast effect on the future share price.
They still have original IF product but now with stronger competition.
I liked their innovative marketing approach for young children as a new segment by their partnering with Lego which should help A2 sales.
However IMHO I think promoting A2 to adults as a protein rich drink is a mistake. They have poured millions of $'s into establishing a brand based on the message that it can provide relief from a common digestive ailment many experience after consuming 'normal' milk containing both the A1 and A2 proteins vs. A2 with just the A2 protein component. IMO that remains a very strong unique selling point for adults to switch to A2.
...... simply commenting on where I think their marketing initiatives will take the sp.
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
FY 23 PE of 35 for a company with growth in the very low double digits. Hmmm
Quote from: Basil on Mar 01, 2023, 07:13 PMhttps://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
FY 23 PE of 35 for a company with growth in the very low double digits. Hmmm
It's no secret that you don't like this company and would never invest in it, however missing out on a 70% capital upside from the lows already is no reason to continue questioning how stupid the 'market' seems to be over-valuing this opportunity. The only real question is why you keep coming back to slag it? What's in it for you?
"In a survey last year (https://mp.weixin.qq.com/s/IHPk-5600_hmjzpKSfUOgw) of about 20,000 younger Chinese people, mostly from 18 to 25, two-thirds of respondents said they did not want to have children."
https://www.nytimes.com/2023/02/26/world/asia/china-birth-rate.html
Quote from: KW on Mar 01, 2023, 08:47 PM"In a survey last year (https://mp.weixin.qq.com/s/IHPk-5600_hmjzpKSfUOgw) of about 20,000 younger Chinese people, mostly from 18 to 25, two-thirds of respondents said they did not want to have children."
https://www.nytimes.com/2023/02/26/world/asia/china-birth-rate.html
If they follow through with that then China could become the new japan in a couple decades. That'll be fun for the world economy. But thats a problem for future moose.
Quote from: KW on Mar 01, 2023, 08:47 PM"In a survey last year (https://mp.weixin.qq.com/s/IHPk-5600_hmjzpKSfUOgw) of about 20,000 younger Chinese people, mostly from 18 to 25, two-thirds of respondents said they did not want to have children."
https://www.nytimes.com/2023/02/26/world/asia/china-birth-rate.html
Until the government incentivizes them.
Quote from: Minimoke on Mar 02, 2023, 10:05 AMUntil the government incentivizes them.
Governments in many countries with negative population growth tried that. It works for a short time - if couples anyway want children, than incentives help them to start earlier to not miss out on the incentives. However - long term so far no government was successful to turn the trend around. Won't be different for China.
Second issue is - just look at the Chinese population pyramid. For biological reasons you need a sufficient number of young females to bring the birth rate up. It is too late for China, not enough young people and most of them male (many couples aborted female babies under the one child policy, in hindsight not a clever move) unless they find a method to make people younger again.
But hey - they could import young women from countries which still have a surplus of young people ... plenty of African countries as well as Muslim countries (like Afghanistan, Philippines, Indonesia) spring to mind.
But than - they might not need A2 milk ...
Quote from: Buzz on Mar 01, 2023, 08:19 PMIt's no secret that you don't like this company and would never invest in it, however missing out on a 70% capital upside from the lows already is no reason to continue questioning how stupid the 'market' seems to be over-valuing this opportunity. The only real question is why you keep coming back to slag it? What's in it for you?
It would seem there's a lot of negative energy carried over from the other forum behind your post. I was merely responding to a post my friend Whome made and adding a different perspective. Crickey, commenting on the metrics is slagging a company...you being more than a little oversensitive? You're new around here so in this instance I'll give you the benefit of the doubt, just once, and I'll keep this polite. The value of a forum is sharing different perspectives both positive and otherwise...but I think you know that already.
Quote from: KW on Mar 01, 2023, 08:47 PM"In a survey last year (https://mp.weixin.qq.com/s/IHPk-5600_hmjzpKSfUOgw) of about 20,000 younger Chinese people, mostly from 18 to 25, two-thirds of respondents said they did not want to have children."
https://www.nytimes.com/2023/02/26/world/asia/china-birth-rate.html
And that is why China is a booming petfood market.....
Quote from: Sideshow Bob on Mar 02, 2023, 11:59 AMAnd that is why China is a booming petfood market.....
Interesting point ... and you well might be right. Which stocks do you recommend to satisfy this likely Chinese urge?
Quote from: BlackPeter on Mar 02, 2023, 10:17 AMGovernments in many countries with negative population growth tried that. It works for a short time - if couples anyway want children, than incentives help them to start earlier to not miss out on the incentives. However - long term so far no government was successful to turn the trend around. Won't be different for China.
Second issue is - just look at the Chinese population pyramid. For biological reasons you need a sufficient number of young females to bring the birth rate up. It is too late for China, not enough young people and most of them male (many couples aborted female babies under the one child policy, in hindsight not a clever move) unless they find a method to make people younger again.
But hey - they could import young women from countries which still have a surplus of young people ... plenty of African countries as well as Muslim countries (like Afghanistan, Philippines, Indonesia) spring to mind.
But than - they might not need A2 milk ...
Just as well they are adding products additional to Infant Formula
Quote from: Sideshow Bob on Mar 02, 2023, 11:59 AMAnd that is why China is a booming petfood market.....
That is probably a good point. The Japanese are completely bonkers about their pets, you see more dogs in a shopping mall than you see children. If China becomes more like Japan than Korea ( :o ) then there is definitely a growth market there.
Quote from: Buzz on Mar 01, 2023, 08:19 PMIt's no secret that you don't like this company and would never invest in it, however missing out on a 70% capital upside from the lows already is no reason to continue questioning how stupid the 'market' seems to be over-valuing this opportunity. The only real question is why you keep coming back to slag it? What's in it for you?
Yes the company has clearly turned a corner and is progressing nicely under the new CEO, im expecting them to start paying a dividend within the next couple of years. I think your questions are valid and find it very strange how some people seem to continually bag certain companies forever and a day after having more than made their points of view known.
Quote from: Basil on Mar 02, 2023, 10:51 AMIt would seem there's a lot of negative energy carried over from the other forum behind your post. I was merely responding to a post my friend Whome made and adding a different perspective. Crickey, commenting on the metrics is slagging a company...you being more than a little oversensitive? You're new around here so in this instance I'll give you the benefit of the doubt, just once, and I'll keep this polite. The value of a forum is sharing different perspectives both positive and otherwise...but I think you know that already.
I see that you've edited your original post. BTW, I'm not new around here, or to share investing or trading, just been lurking since day one and haven't posted much since the volume of chat here is still small. Nice place though, hope we can keep up the civil discourse.
Sure, happy with all that you say, let's keep it polite. ATM is a momentum traders dream, especially for those who can work both sides of the trade, long or short. Sustained long runs up or down. FA doesn't seem to make much difference with ATM, never has, whereas TA is everything and is working very well. Such a volatile stock, with massive money calling the moves, just need to be onto it and follow them.
+72% already since the bottom, can't argue with that! 'Money in the bank', as Tina from Turners would say .. lol ;D happy days.
GLTA
Buzz - love your tagline.
oh the irony of the post you responded to.
Quote from: BlackPeter on Mar 02, 2023, 12:03 PMInteresting point ... and you well might be right. Which stocks do you recommend to satisfy this likely Chinese urge?
Not trying to thread hijack......
The two listed on the NZX would be:
Ebos - Owns or has interests the likes of Masterpet, Animates & Blackhawk. Masterpet has alot of Made-in-China product but is all over the supermarket sector. Not so much exporting.
Scales - Raw material supplier and their "Global Proteins" business going pretty well, with further plans to develop this business. There is a feeling raw material is going to be where its at.
Both of these companies obviously have business units unrelated to pet. Otherwise not alot of listed activity for pet. Mainly private companies, mainly with foreign (Chinese) interest. Sector has boomed in NZ in recent years.
Here is an example..... https://www.bloomberg.com/news/articles/2021-09-20/fountainvest-agrees-to-buy-new-zealand-pet-food-firm-ziwi
Quote from: Sideshow Bob on Mar 03, 2023, 01:11 PMOtherwise not alot of listed activity for pet. Mainly private companies, mainly with foreign (Chinese) interest. Sector has boomed in NZ in recent years.
Here is an example..... https://www.bloomberg.com/news/articles/2021-09-20/fountainvest-agrees-to-buy-new-zealand-pet-food-firm-ziwi
Pet food is a frustrating sector. What usually happens is a private company sets up and makes great pet food, gets a good reputation for a quality product, and then its promptly bought out by one of the big food companies who then look to cut costs and fatten margins by reducing the quality of the food as they push it from a niche product to a mass market one. This is what happened with Blackhawk. I currently buy Orijen, which just got bought by Mars last Nov, so I expect the same thing to happen to that brand as well :'( I'm looking forward to Costco opening down here as their pet food is made by Diamond which remains private and family owned, and their food is good quality.
The other way it goes, is that a brand gets bought by private equity and then they turn it into a super premium pet food for the export market, which makes it totally unaffordable for us Kiwis, like what happened to Ziwipeak - its now $96 per kilo! :'( (I stopped buying it when it hit $50 a kilo, no way do my dogs get to eat better than I do lol)
Quote from: KW on Mar 03, 2023, 01:36 PMPet food is a frustrating sector. What usually happens is a private company sets up and makes great pet food, gets a good reputation for a quality product, and then its promptly bought out by one of the big food companies who then look to cut costs and fatten margins by reducing the quality of the food as they push it from a niche product to a mass market one. This is what happened with Blackhawk. I currently buy Orijen, which just got bought by Mars last Nov, so I expect the same thing to happen to that brand as well :'( I'm looking forward to Costco opening down here as their pet food is made by Diamond which remains private and family owned, and their food is good quality.
The other way it goes, is that a brand gets bought by private equity and then they turn it into a super premium pet food for the export market, which makes it totally unaffordable for us Kiwis, like what happened to Ziwipeak - its now $96 per kilo! :'( (I stopped buying it when it hit $50 a kilo, now way do my dogs get to eat better than I do lol)
wonder how many of those covid dogs and cats will get replaced when they start passing away in ~8 years time (for the dogs anyway). Still some time off.
EBOS has done well in pet and made some good acquisitions.
Scales Corp's protein business has gone gangbusters and a big beneficiary of the pet boom - shame about them apples tho.
Good money in doggy daycare and grooming for a good operator
50 bucks a day for daycare and 100 bucks plus for a groom pretty lucrative
Oh Deer, it seems some of us older dogs have been drinking the wrong milk. Wonder if there's such a thing as A2 Deer milk ?, maybe it there was it would be very dear, (sorry couldn't help myself).
https://www.stuff.co.nz/business/farming/131411374/drinking-deer-milk-could-have-health-benefits-scientists-suggest
Quote from: Basil on Mar 06, 2023, 08:42 PMOh Deer, it seems some of us older dogs have been drinking the wrong milk. Wonder if there's such a thing as A2 Deer milk ?, maybe it there was it would be very dear, (sorry couldn't help myself).
https://www.stuff.co.nz/business/farming/131411374/drinking-deer-milk-could-have-health-benefits-scientists-suggest
$80 per litre....! I will pass thanks.
Useful update on MVM......
https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/a2-aims-for-mvm-profitability
Quote from: Ferg on Mar 06, 2023, 09:09 PM$80 per litre....! I will pass thanks.
Crikey, didn't know that...makes it a pretty expensive way to build muscle mass. Probably cheaper to simply walk your dog every day lol.
Quote from: Left Field on Mar 07, 2023, 12:33 PMUseful update on MVM......
https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/a2-aims-for-mvm-profitability
I see they are sourcing out of Synlait - did they ever announce who their "international Customer" is?
Two new 'Grass fed' additions to the A2 USA fresh milk market. More shelf space. More exposure.
ATM take Nestle to court over its use of a similar A2 logo..... and win.....plus costs
https://curia.europa.eu/juris/document/document.jsf?text=&docid=271017&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=2773970
(originally posted by wordplaya on HC)
Another brick in the wall..
Quote from: Left Field on Mar 16, 2023, 05:30 PMATM take Nestle to court over its use of a similar A2 logo..... and win.....plus costs
https://curia.europa.eu/juris/document/document.jsf?text=&docid=271017&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=2773970
(originally posted by wordplaya on HC)
Another brick in the wall..
They seem to have a strong moat around their logo. I cant see the class actions gaining much traction either other than a possible token out of court settlement.
Quote from: Breezy on Mar 16, 2023, 05:37 PMI cant see the class actions gaining much traction either other than a possible token out of court settlement.
Can you elaborate on how you're forming that opinion? Given the claims are of "deception" in 5 breaches of their continuous disclosure obligations, it may be that even if A2 have cover insurance, they wouldn't pay. These class actions are far more common in Aust (hence S&G and Shine as the leads.) It will be, at best, a prolonged and unwelcome distraction.
Quote from: Hectorplains on Mar 16, 2023, 09:21 PMCan you elaborate on how you're forming that opinion? Given the claims are of "deception" in 5 breaches of their continuous disclosure obligations, it may be that even if A2 have cover insurance, they wouldn't pay. These class actions are far more common in Aust (hence S&G and Shine as the leads.) It will be, at best, a prolonged and unwelcome distraction.
A2 have a good record of defending litigation and because of Covid i think it will be a high bar for any litigation to be successful in court in this instance. I'm picking a token out of court settlement in due course at best but as you say a prolonged unwelcome distraction for some time to come meantime.
So ATM has completed its share buy backs.... https://www.nzx.com/announcements/408581
Here's what Buffet says about buy backs:
"When stock can be bought below a business's value it probably is its best use of cash."
"...Berkshire will be a significant repurchaser of its shares, transactions that will take place at prices above book value but below our estimate of intrinsic value. The math of such purchases is simple: Each transaction makes per-share intrinsic value go up, while per-share book value goes down..."
"All of our major holdings enjoy excellent economics, and most use a portion of their retained earnings to repurchase their shares. We very much like that: If Charlie and I think an investee's stock is underpriced, we rejoice when management employs some of its earnings to increase Berkshire's ownership percentage."
Bell Potter downgrades A2 Milk from Buy to Hold
Quote from: KW on Mar 28, 2023, 04:11 PMBell Potter downgrades A2 Milk from Buy to Hold
Haven't Bell Potter been one of A2's greatest supporters for years
Quote from: winner (n) on Mar 28, 2023, 04:29 PMHaven't Bell Potter been one of A2's greatest supporters for years
Maybe they're recognizing that A2 has a lot of work ahead, starting with their problem children SML and MVM. 2025 looms as the key year in that SML relationship. Lots of money needed for Mataura projects . Anecdotally, the first of these; the new boiler is running behind time and over budget.
Quote from: Hectorplains on Mar 29, 2023, 11:06 AMMaybe they're recognizing that A2 has a lot of work ahead, starting with their problem children SML and MVM. 2025 looms as the key year in that SML relationship. Lots of money needed for Mataura projects . Anecdotally, the first of these; the new boiler is running behind time and over budget.
Best to just ignore all analysts ever changing targets, they do it purely for their own benefits and at the end of the day they adjust their targets to align with changing share prices, they don't determine them.
Quote from: Breezy on Mar 29, 2023, 11:22 AMBest to just ignore all analysts ever changing targets, they do it purely for their own benefits and at the end of the day they adjust their targets to align with changing share prices, they don't determine them.
Analysts can't predict the future. Nobody can. Full Stop.
Any large enough group of people contains some idiots, some crooks but as well some geniuses and some people of high integrity, no matter whether we talk about analysts, clerics (any religion), policemen, teachers, nurses or any other profession, sex, ethnicity or any other group.
This beating up of individual groups is just inappropriate and plainly wrong. Any generalisation is.
Quote from: Hectorplains on Mar 29, 2023, 11:06 AMMaybe they're recognizing that A2 has a lot of work ahead, starting with their problem children SML and MVM. 2025 looms as the key year in that SML relationship. Lots of money needed for Mataura projects . Anecdotally, the first of these; the new boiler is running behind time and over budget.
How far behind and how much over budget are they currently running? Thanks
They're still on site prep and early construction, which I understand was supposed to be wrapped up in late February. I have a mate doing contract work on it, that was his summation. He thinks they'll be doing well to have it operational this year.
Quote from: BlackPeter on Mar 29, 2023, 12:36 PMAnalysts can't predict the future. Nobody can. Full Stop.
Any large enough group of people contains some idiots, some crooks but as well some geniuses and some people of high integrity, no matter whether we talk about analysts, clerics (any religion), policemen, teachers, nurses or any other profession, sex, ethnicity or any other group.
This beating up of individual groups is just inappropriate and plainly wrong. Any generalisation is.
Your last sentence in particular sounds very Woke to me, im talking about ever changing targets not an individual person here.
Quote from: Hectorplains on Mar 29, 2023, 01:18 PMThey're still on site prep and early construction, which I understand was supposed to be wrapped up in late February. I have a mate doing contract work on it, that was his summation. He thinks they'll be doing well to have it operational this year.
Ah, okay. It seems your mate's summation is not far from what the company says in official news letter - "Site preparation and initial construction works will be fully under way next (February) month" and if I recall correctly from their FY report it should be in operation by end of the year. So, it seems so far it's on time. Still not sure about budget though.
Quote from: Hectorplains on Mar 29, 2023, 11:06 AMMaybe they're recognizing that A2 has a lot of work ahead, starting with their problem children SML and MVM. 2025 looms as the key year in that SML relationship. Lots of money needed for Mataura projects . Anecdotally, the first of these; the new boiler is running behind time and over budget.
I don't think there wil be a SML / a2 relationship in 2025. I cant see SML, in its current form, lasting that long
SMH "the long & short of it" profile this morning (https://www.smh.com.au/business/companies/chinese-parents-love-a2-milk-s-infant-formula-do-investors-love-it-too-20230323-p5cusy.html)
Quote from: Minimoke on Mar 29, 2023, 03:34 PMI don't think there wil be a SML / a2 relationship in 2025. I cant see SML, in its current form, lasting that long
A2 started talking last year about the need to be build an end to end supply chain. Where SML fits in that is less clear? Obviously, Synlait is A2's exclusive IF manufacturer for the Chinese, Australian and New Zealand markets until 2025. More importantly SML holds the Chinese SAMR regulatory license for A2 IF. The terms of the A2 - SML relationship have hitherto been most favourably weighted in A2's favour. A2's big talk of a 5 year plan to build and operate factories has so far yielded the start of boiler conversion from coal to electric. This is a green wash project. The boiler is less than 5 years old and perfectly functional as it is. A2 have flagged a whole lot of expensive building and regulatory work ahead.
How much is the taxpayer contributing (EECA) to the boiler conversion?
Quote from: winner (n) on Mar 29, 2023, 04:12 PMHow much is the taxpayer contributing (EECA) to the boiler conversion?
$5 million
Quote from: Breezy on Mar 29, 2023, 01:26 PMYour last sentence in particular sounds very Woke to me, im talking about ever changing targets not an individual person here.
If you call it "woke" if somebody puts non sensical and wrong generalisations right, than "woke" must be a good thing :P ;
Cheers for that ...
Latest research proving what most of us now accept......and this research funded by Nestle
https://www.mdpi.com/2072-6643/15/6/1313
Conclusion: Growing-up milk containing only A2 β-casein were well-tolerated and associated with lower parent-reported constipation scores after two weeks when compared to conventional milks. In healthy toddlers with minor GI distress, A2 GUM improved overall digestive comfort and GI-related symptoms within one week.
Morningstar love A2, so do shorters as media reports short positioning lifted from 2.90% of shares on issue in early January to 4.55% in early April
Bit of good news and share price will rocket back to 7 bucks plus
Quote from: winner (n) on Apr 13, 2023, 07:40 AMMorningstar love A2, so do shorters as media reports short positioning lifted from 2.90% of shares on issue in early January to 4.55% in early April
Bit of good news and share price will rocket back to 7 bucks plus
Takeover talk must be overdue in the Australian?
Seems UBS reiterates its Buy call on a2 Milk Co, expecting a 140% rise in net profit after tax by FY26, thanks to strong infant formula demand and a daigou channel recovery. Data suggest the company is enjoying growing brand recognition, that daigou retail margins are on the rise and that exports into China are growing. UBS believes consensus forecasts appear underdone and expects EPS to return to pre-covid levels by FY26 (30% ahead of consensus). Buy rating and NZ$8.90 target price retained.
Mind you they are talking FY26...... and it's a long way away.
Interesting response from ATM re the SML announcement today
https://www.nzx.com/announcements/410403
" In response to Synlait's announcement, which indirectly refers to a2MC, the
Company is surprised at the extent of the reduction in Synlait's guidance
range and notes the following:
o In the two forecasts provided to Synlait by a2MC since Synlait's previous
guidance update on 17 March 2023, a2MC has lowered its total forecast
production volume needs for English label consumer-packaged infant milk
formula (IMF) in respect of March, April, May and June 2023 production months
by ~1,650 metric tonnes in aggregate (equating to less than 5% of Synlait's
reported Advanced Nutritional sales volumes over the 12 months ending 31
January 2023). This is mainly due to:
o continued weakness in the ANZ Daigou / reseller market which is down 49% in
the most recently reported quarter from Kantar ;
o the impact of significant cumulative delays in English label
consumer-packaged IMF deliveries from Synlait to a2MC over an extended period
expected to be fulfilled in 4Q23 resulting in a material amount of
inventory arriving within a relatively short period which needs to be
managed; and
o ongoing refinement of the Company's English label distribution model
resulting in more customers and distributors being supplied directly out of
Hong Kong and China leading to lower future a2MC and channel inventory
requirements.
o a2MC has recently confirmed its forecast demand based on commencement of
China label consumer-packaged IMF production in line with previously
anticipated timing to receive SAMR re-registration and commencement of
production in Synlait's 4Q23, subject to SAMR approval, as previously
announced by Synlait on 17 March 2023 and reconfirmed today. a2MC is pleased
with this progress; and
o a2MC is in discussions with Synlait regarding the allocation of certain
one-off production/supply chain and other related costs between the two
companies.
Taking all of the above factors noted by the Company into account, a2MC
confirms that there is no material change to its FY23 outlook as confirmed at
the time of the announcement of its 1H23 results on 20 February 2023.........."
Quote from: Left Field on Apr 26, 2023, 09:22 AM...Interesting response from ATM re the SML announcement today
o a2MC is in discussions with Synlait regarding the allocation of certain
one-off production/supply chain and other related costs between the two
companies.
.....
So can we read into this that there is a dispute due to SML failing to meet some contracted requirement and A2 are looking for compo of some kind.
A2 did a subtle downgrade today ......anybody notice?
Quote from: winner (n) on Apr 26, 2023, 10:12 AMA2 did a subtle downgrade today ......anybody notice?
"As a result, the Company expects revenue growth to be at the low end of its previous expectations (ie approximately
10%). The Company continues to expect an EBITDA margin (% of sales) similar to FY22.
Quote from: winner (n) on Apr 26, 2023, 10:12 AMA2 did a subtle downgrade today ......anybody notice?
Yes. 8)
Quote from: KW on Apr 26, 2023, 10:43 AMYes. 8)
From revenues 'low double digit growth' and ebitda margin 'slightly higher' (FY23 v FY 22) to 'approx 10%' and 'similar' I reckon is a $20m/$25m downgrade in FY23 ebitda from previous guidance .....but still about 10% higher than last year
Market doesn't seem to have liked this downgrade
Quote from: winner (n) on Apr 26, 2023, 11:17 AMFrom revenues 'low double digit growth' and ebitda margin 'slightly higher' (FY23 v FY 22) to 'approx 10%' and 'similar' I reckon is a $20m/$25m downgrade in FY23 ebitda from previous guidance .....but still about 10% higher than last year
Market doesn't seem to have liked this downgrade
ATM need at least 3 things to begin to outperform again IMO
1.) SAMR re registration completed
2.) MVM upgrade complete and performing well
3.) Less reliance on China via growth in the US market
Not going to happen overnight.
Personnel changes.....healthy promotions from within ATM while the USA move bodes well.
https://www.nzx.com/announcements/411090
While some will say 'mere musical chairs'
Possibly the MVM man thought job well done ...it's up and running ....time for me to move on
Maybe everyone was too quick to judge ... :(
Back in Dec 2019 Jayne Hrdlicka said "she had not anticipated the amount of travel involved when she took up the role 18 months ago... The Board and I agreed that this next phase is going to be too difficult to manage alongside my other commitments whilst also managing the health and wellness priorities of my family and me."
Turns out her husband was given a terminal cancer diagnosis in Nov 2019. He has now passed.
https://www.afr.com/markets/equity-markets/virgin-boss-hrdlicka-to-take-personal-leave-20230508-p5d6t2
Quote from: KW on May 09, 2023, 02:26 PMMaybe everyone was too quick to judge ... :(
Back in Dec 2019 Jayne Hrdlicka said "she had not anticipated the amount of travel involved when she took up the role 18 months ago... The Board and I agreed that this next phase is going to be too difficult to manage alongside my other commitments whilst also managing the health and wellness priorities of my family and me."
Turns out her husband was given a terminal cancer diagnosis in Nov 2019. He has now passed.
https://www.afr.com/markets/equity-markets/virgin-boss-hrdlicka-to-take-personal-leave-20230508-p5d6t2
Sorry to hear....... and yes sad she was judged v harshly by some on these forums.
Quote from: KW on May 09, 2023, 02:26 PMMaybe everyone was too quick to judge ... :(
Back in Dec 2019 Jayne Hrdlicka said "she had not anticipated the amount of travel involved when she took up the role 18 months ago... The Board and I agreed that this next phase is going to be too difficult to manage alongside my other commitments whilst also managing the health and wellness priorities of my family and me."
Turns out her husband was given a terminal cancer diagnosis in Nov 2019. He has now passed.
https://www.afr.com/markets/equity-markets/virgin-boss-hrdlicka-to-take-personal-leave-20230508-p5d6t2
You are right ... we probably forget too often that Senior Managers, Board Members, Politicians and even fellow posters ;) are human as well ... and not protected from the uncertainties of life.
We probably should treat them accordingly. A bit more respect and empathy for everybody might help.
Anyway - Thanks for rising that.
Jeez, ATM share price down nearly 30% since beginning of year ...ouch
Surely it's not going below 5 bucks again
Suppose buy of the decade if it does
Directors paying an average of nearly $7 to buy shares back. Shareholders must be thrilled...
TA not looking great either.....
SML woes not helping....... thoughts of ATM buying more of SML don't impress me either.
Call me old fashioned but I preferred ATM's old 'capital light' approach.
Quote from: Basil on May 15, 2023, 01:30 PMDirectors paying an average of nearly $7 to buy shares back. Shareholders must be thrilled...
Yep at $6.87 average
Never have really understood wisdom of punters getting excited and even clamouring for buybacks ....never seem to do much for shareholders and often only enrich management as buyback $s included in TSR calcs for big bonuses.
At least EPS etc should be higher ........but does that actually do anything for the share price in reality
Right ... SHOW US THE MONEY!!!!!!!!
https://www.youtube.com/watch?v=mBS0OWGUidc
and
https://www.telegraph.co.uk/finance/personalfinance/9066005/What-Charles-Dickens-said-about-money-12-memorable-quotes.html
SAMR approved......
https://www.nzx.com/announcements/412552
SAMR's approval will allow Synlait to manufacture 至初® for a2MC until September 20271.
Quote from: Left Field on Jun 06, 2023, 08:38 AMSAMR approved......
https://www.nzx.com/announcements/412552
SAMR's approval will allow Synlait to manufacture 至初® for a2MC until September 20271.
Excellent. Will see past my life time!
Edit. Market seems to like it, 700,000 shares crossing at $6.15 up 7%
How hard is it to issue announcements in English on the NZX and proof read the date ?
Why are these Muppets paid these sorts of salaries and they can't even issue a properly written stock exchange announcement?
Quote from: Minimoke on Jun 06, 2023, 08:45 AMExcellent. Will see past my life time!
Edit. Market seems to like it, 700,000 shares crossing at $6.15 up 7%
No reason that the sp shouldn't be over $7 as it was before the rereg uncertainty took hold, Instos alone will decide that though, they completely control and determine the sp of this stock at All times.
Did A2 destroy Bubs China business or is the China IF market completely stuffed
Bulbs sales to China hardly anything at the moment .....there's just too much stock in warehouses over there.....5 years worth
From Bubs the other day -
As previously reported, there remains a significant amount of inventory held in trade, predominantly Bubs Supreme. This product was developed for AZ Global and Alice for exclusive distribution into China. Bubs Australia understands there is more than 5 years of Bubs Supreme finished goods inventory held in multiple warehouses, based on the current rate of sale.
Quote from: winner (n) on Jul 04, 2023, 02:34 PMDid A2 destroy Bubs China business or is the China IF market completely stuffed
Bulbs sales to China hardly anything at the moment .....there's just too much stock in warehouses over there.....5 years worth
From Bubs the other day -
As previously reported, there remains a significant amount of inventory held in trade, predominantly Bubs Supreme. This product was developed for AZ Global and Alice for exclusive distribution into China. Bubs Australia understands there is more than 5 years of Bubs Supreme finished goods inventory held in multiple warehouses, based on the current rate of sale.
Bubs does not have SAMR registration in China like A2 does so their sales are constrained.
Quote from: winner (n) on Jul 04, 2023, 02:34 PMDid A2 destroy Bubs China business or is the China IF market completely stuffed
- A2 has gained market share in China.... Bubs has lost market share.
- Bub's business model based on goats milk is not as financially viable as A2's dairy based product. (Winnie, you try milking a few goats and you'll see what I mean!)
- A2 benefiting from its move away from reliance on Daigau channels. Mother and Baby retail model now working just fine for A2.
So the China IF market is not stuffed.... and even if it is...the next step in A2's cunning master plan is for MVM to start supplying the USA market with A2 IF.
Quote from: Left Field on Jul 04, 2023, 03:58 PM...the next step in A2's cunning master plan is for MVM to start supplying the USA market with A2 IF.
MVM's new renewable energy boiler installed......production getting closer.
https://www.odt.co.nz/news/the-south-today/electric-upgrade-mataura-valley-milk
Interesting to see ATM's progress moving away from reliance on the China market.
This posted by Wordplaya on HC
FYI "New Origin"/Yuhan Pharmaceuticals is the exclusive distributor of A2M products in Korea.
Some excerpts:
"New Origin, a health & lifestyle brand for Yuhan Health & Lifestyle, celebrated World Population Day on the 11th, and its 'a2 Milk' 200ml product exceeded 1 million units in cumulative sales."
"Due to the continuous decrease in the number of births, the dairy industry, which mainly consumes infants and young children, has been hit by a decline in sales. In fact, white milk consumption per capita has been steadily declining over the past decade, from 28.1 kg in 2012 to 26.2 kg in 2022. Considering the shrinking milk market, it is evaluated that New Origin a2 Milk's breakthrough of 1 million units is very encouraging. It is analyzed that this is due to consumers' sympathy for good raw materials and ingredients that Yuhan Health Life has insisted on."
Yep Nupe... that economy is not a normal functioning capital market . Its command and control they will likely loose control of it .... Crash is the word...
https://www.cnbc.com/2023/08/01/china-should-act-to-pull-sputtering-economy-back-from-brink-professor-.html
ATM might be able to ride out the crash but ....
whos going to pay for all those new toys,,,,, aircraft carriers, nuclear sub, tanks, missiles .... guns , lots of guns...
Big day today. Presumably results are going to be within guidance. I want to hear what they are going to do with their cash. The buy back didn't really work.
Good result in difficult times.....gaining market share in the declining Chinese market is testimony to their product and team...... however, as I've been saying for a long time, they need strength in more markets. Will FY 24 be the year USA sees a2 introduced?
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/416640/400764.pdf
1. Full year result in line with the Company's previous guidance with double digit revenue and earnings growth
2. Result driven by strong growth in China segment with sales up 38% and record market share in China label IMF
3. China brand health reached new highs driven by record levels of marketing investment increasing by 13% to $260m
4. Total IMF sales were up over 8% in a market that declined by 14% making a2MC a top-3 share gainer in the market
5. Successful SAMR re-registration of China label IMF product provides continued access to the domestic market
Here's a bit more on USA
Following the receipt of FDA's enforcement discretion approval to import IMF, a small amount of a2 Platinum® IMF product has been produced recently to facilitate FDA required clinical studies and distribution trials during FY24
• a2MC is pursuing longer term FDA approval of a2 Platinum®, while carefully considering market entry options
• Accelerating the path to profitability in the USA by FY25 / FY26 remains a key strategic priority – steps taken to improve future profitability include price increases, reduced trade spend, marketing effectiveness, merchandising cost reduction and management changes
Wise to keep their cash mountain ready for the big USA push.
On track to achieve ambition to grow sales to $2 billion and improve EBITDA margins in the 'teens' over the medium term
Biggest concern is the "low single figure" growth outlook.
And I'm still brassed off they are sitting on $800m cash with zero plans on what to do with it. Other than shareholders get diddly squat.
Quote from: Minimoke on Aug 21, 2023, 09:02 AMBiggest concern is the "low single figure" growth outlook.
And I'm still brassed off they are sitting on $800m cash with zero plans on what to do with it. Other than shareholders get diddly squat.
Given the hard economic times with many diary companies struggling I think it wise to keep their strong balance sheet and cash reserves..... they have talked about the need for more acquisitions and may need more production facilities or distribution facilities. That said, I also used to be a big fan of their 'capital light' approach, but concede that was the past and they now need more certainty in quality product supply.
Ealy punters on NZX don't like result. Down 7%
Hardly a high margin growth company these days is it
$4.50 to $5.00 probably a realistic share price in circumstance but would want to see that growth slowing even more
Quote from: winner (n) on Aug 21, 2023, 10:35 AMHardly a high margin growth company these days is it
$4.50 to $5.00 probably a realistic share price in circumstance but would want to see that growth slowing even more
MVM production/revenue should increase margins but not till FY25...... and China risks are growing meantime. Caution needed until we see more progress in Asia or USA.
Selling for less than 20x earnings (ex-Cash) but China risks are a concern...plenty of growth still possible but need their birth rate to stabilise at minimum and better still recover. 1.2 births per female now versus about 1.6 in NZ, Australia, USA is a huge difference. China still producing almost 10m babies a year but the trend is concerning. India is around 2.0 but most too poor to buy consumer goods...
oversold on the NZX this morning based on results......bought some this morning expect a bounce off $4.90 NZX when ASX opens
FY24 Outlook
Market conditions
China IMF market conditions are uncertain but likely to become more challenging in FY24 with a further double-digit decline in
market value expected. This is due to volume declines driven by the rolling impact of fewer newborns in recent years on later
stage IMF products, and a lower number of newborns expected in CY23 due to the lagged impact of COVID-19 prior to an
expected increase in CY24. In addition, it is expected that average selling prices will remain under pressure due to an increase in
competitive intensity driven by the market-wide transition to new GB product, excess manufacturing capacity and challenging
macroeconomic conditions.
Quote from: Waltzing on Aug 01, 2023, 10:15 PMYep Nupe... that economy is not a normal functioning capital market . Its command and control they will likely loose control of it .... Crash is the word...
https://www.cnbc.com/2023/08/01/china-should-act-to-pull-sputtering-economy-back-from-brink-professor-.html
ATM might be able to ride out the crash but ....
whos going to pay for all those new toys,,,,, aircraft carriers, nuclear sub, tanks, missiles .... guns , lots of guns...
Good thing is - with dropping birthrates China will have as well less cannon fodder to play with and need less guns to supply to them.
I know from experience that you don't want to carry more than one gun per soldier.
This would leave them with a bit more money for subsidizing milk formula, so that their shrinking pool of repruductive females can afford to produce new cannon fodder.
Craig's just out
ATM expecting 2H24 to be stronger than 1H24 (implying a decline in earnings in 1H24) 5) No buy back or dividend announced (likely to disappoint market given cash balance over c.$800m). Conclusion: Guidance represents a material downgrade to ATM's FY24 outlook of c.12% relative to consensus and c.5% relative to CIPe's bottom of the street estimates. We had expected a soft outlook for the core infant formula business but with no buyback, or particularly positive news on Mataura Valley or the US business to offset this, we expect ATM shares will trade lower today.
This doesn't bode well ... in the media re Stats NZ release
New Zealand infant formula exports halved in July from a year earlier, compounding a 13% decline in the price simultaneously.
A2 have Aspirations of sales ~$2billion in F27
Jeez that's a growth rate of 5%/6% pa
A2 a real growth company these days eh ...no wonder share price tankin
Should we need reminding
"The buyback programme that started on 7 November 2022 ended with the acquisition of 21.68 million A2M shares at an average price of NZ$6.87 per share. This buyback represents 2.9% of total issued capital, and the company spent around NZ$149 million on this programme, including brokerage costs."
Current SP down 12.5% to $4.68
Quote from: Minimoke on Aug 21, 2023, 04:33 PMShould we need reminding
"The buyback programme that started on 7 November 2022 ended with the acquisition of 21.68 million A2M shares at an average price of NZ$6.87 per share. This buyback represents 2.9% of total issued capital, and the company spent around NZ$149 million on this programme, including brokerage costs."
Current SP down 12.5% to $4.68
So $6.87 was good buying then
The $288m they spent on Synlait so far is worth about $60m today
Quote from: winner (n) on Aug 21, 2023, 04:59 PMSo $6.87 was good buying then
The $288m they spent on Synlait so far is worth about $60m today
I'm surprised Synlait held up as well as it did today. I reckon that's going to get hit by the ugly stick that has been used today when their results/outlook come out
Quote from: winner (n) on Aug 21, 2023, 04:59 PMSo $6.87 was good buying then
The $288m they spent on Synlait so far is worth about $60m today
Directors are absolute "Legends" eh ;)
How did those class actions turn out in the end ?
Bortolussi seems to piss off analysts with his vague answers. Bad idea to puss off analysts, esp so soon after printing guidance lower than their expectations.
Never mind ....seems the way he operates.
Fron NBR -
On an investor call, Craigs Investment Partners senior analyst Stephen Ridgewell asked for more specificity around what was meant by "teens" in respect of ebtida margin guidance, and when the company expected margin improvement to occur.
Bortolussi said it was not providing specific guidance on where in the "teens" but said it had made it clear the goal was to be in that range and targeting year-on-year guidance.
"We're guiding to margins being broadly in line with last year. Of course we will try and target an improvement in that.
Quote from: winner (n) on Aug 21, 2023, 04:59 PMSo $6.87 was good buying then
The $288m they spent on Synlait so far is worth about $60m today
I see SML has a market cap of $321m. And I think that is overvallued. No sign they have sold Dairy Foods and Talbot, No news that there balance sehhet has been shored up. And no market nows on production given this ATM sales downgrade.
So lets say SML is with $300m (and I think I am being generous)
They own 20% which is the $60m you mention
Which means remaining value is $240m.
Which is just 30% of A2Ms current cash reserve.
Buy out SML, get synergies between SML, MVN and Pokeno - they would have a large part of South Island covered and a good bit of the North Islan
Get rid of all the ESG nonsense (except the absolute minimum) and focus on productivity and efficiency.
Package it all up nicely and put the whole lot on the block. A buyer would get 3 production facilities, well established multi national supply lines and a pile of cash
Sounds like a plan Minimoke but the fly in the ointment is likely to be Bright Dairy who's Chinese owners will want their pound of flesh and then some...
So lets say SML is with $300m (and I think I am being generous)
Be lucky if its really worth $200m with the weak outlook. I wouldn't even pay $1 a share if I was told I had to hold for several years.
Morgans like ATM's "Strong execution."
Are A2M about to write off their investmetn in SML?
Today they have announced their intention to cancel Synliats exclusive supply agreement for stages 1 to 3 of a2MC's current infant milk formula (IMF) products. Instread looking at utilising Mataura.
Or, do they expect the value of SML to totally tank, and they will come in with a takeover offer that SML can't say no to. Afterall A2M has more than enough cash.
Though maybe a purchase of distressed assets in a liquidation sale might be a better strategy
https://www.directbroking.co.nz/DirectTrade/dynamic/announcement.aspx?id=6476875
Quote from: Minimoke on Sep 18, 2023, 08:56 AMAre A2M about to write off their investmetn in SML?
Today they have announced their intention to cancel Synliats exclusive supply agreement for stages 1 to 3 of a2MC's current infant milk formula (IMF) products. Instread looking at utilising Mataura.
Or, do they expect the value of SML to totally tank, and they will come in with a takeover offer that SML can't say no to. Afterall A2M has more than enough cash.
Though maybe a purchase of distressed assets in a liquidation sale might be a better strategy
https://www.directbroking.co.nz/DirectTrade/dynamic/announcement.aspx?id=6476875
Actually - they might want to be careful with distressing SML too much. Not sure SML will keep their Chinese export licence if they go broke ... it is linked to the physical factory (in Dunsandel) and its owner (Synlait). If Davids war games result in first Synlait and then ATM going broke (because they don't have any Chinese milk formula anymore they are allowed to supply), than this would be an amazing example of shooting oneself into the foot.
Anyway - what a spectacle to watch from a safe distance ... though I feel very sorry for the Synlait staff. They must go through a terrible time - and I know some of them personally - quite nice and competent people.
Quote from: BlackPeter on Sep 18, 2023, 10:20 AMActually - they might want to be careful with distressing SML too much. Not sure SML will keep their Chinese export licence if they go broke ... it is linked to the physical factory (in Dunsandel) and its owner (Synlait). If Davids war games result in first Synlait and then ATM going broke (because they don't have any Chinese milk formula anymore they are allowed to supply), than this would be an amazing example of shooting oneself into the foot.
Anyway - what a spectacle to watch from a safe distance ... though I feel very sorry for the Synlait staff. They must go through a terrible time - and I know some of them personally - quite nice and competent people.
ATM said in last Annual Report they are aiming to have 3 China Label registrations. So I am sure the company is thing through the ramifications.
Quote from: Minimoke on Sep 18, 2023, 10:22 AMATM said in last Annual Report they are aiming to have 3 China Label registrations. So I am sure the company is thing through the ramifications.
Sure - but I guess we all realize that aiming for Chinese registration and getting it are two different pair of shoes. From memory - it took SML at the time more than a year to get through the process, despite having a significant Chinese cornerstone shareholder and despite a much friendlier geopolitical situation at that time.
Quote from: BlackPeter on Sep 18, 2023, 10:29 AMSure - but I guess we all realize that aiming for Chinese registration and getting it are two different pair of shoes. From memory - it took SML at the time more than a year to get through the process, despite having a significant Chinese cornerstone shareholder and despite a much friendlier geopolitical situation at that time.
There were issues around covid that delayed the re-registration process. NZ now has people on the ground here who do the audits. MVN also has a chines stakeholder.
I have no doubt getting registration isn't easy. But its not like A2M are trying to sell their new stuff tomorrow. They are looking a few years out. And with nice shiny new stainless in Mautaura then this shouldn't be too had a process.
Quote from: Minimoke on Sep 18, 2023, 10:38 AMThere were issues around covid that delayed the re-registration process. NZ now has people on the ground here who do the audits. MVN also has a chines stakeholder.
I have no doubt getting registration isn't easy. But its not like A2M are trying to sell their new stuff tomorrow. They are looking a few years out. And with nice shiny new stainless in Mautaura then this shouldn't be too had a process.
If SML keeps surviving, the supply line might work. If you have however a look at their books and the
coming renewal of their bank facilities and their meagre earnings (even before A2M pulling the plug) - I'd say, this is not a given.
Allow SML to go down the gurgler later in the year (e.g. because the banks don't like the earnings outlook and pull the plug) - where does this leave ATM supplying product?
The other question is as well - even if ATM gets Chinese registration for other products, SML owns not just the registration but as well the IP for their A2 Platinum IMF. Just wondering how ATM will manage to produce and sell stuff SML holds IP and registration for? I guess we know about Chinese companies doing such exercises ... but ATM is subject to NZ Law, aren't they?
Quote from: BlackPeter on Sep 18, 2023, 11:11 AMIf SML keeps surviving, the supply line might work. If you have however a look at their books and the
coming renewal of their bank facilities and their meagre earnings (even before A2M pulling the plug) - I'd say, this is not a given.
Allow SML to go down the gurgler later in the year (e.g. because the banks don't like the earnings outlook and pull the plug) - where does this leave ATM supplying product?
The other question is as well - even if ATM gets Chinese registration for other products, SML owns not just the registration but as well the IP for their A2 Platinum IMF. Just wondering how ATM will manage to produce and sell stuff SML holds IP and registration for? I guess we know about Chinese companies doing such exercises ... but ATM is subject to NZ Law, aren't they?
If the banks pull the plug then I see the liquidators moving in. They will keep the plant ticking over because mothballing it will make it less attractive to buyers. (Note the amount of inventory held by A2)
Banks will look at gaining as much as they can from a distressed sale process. Up on the block will go inventory on hand, stainless steel SAMR and IP.
At half year bank had $350m in working capital and revolving credit. So that is what they will want to recover.
A2 has approx $800m in cash. Lets say they can pick it up for $315m - with banks taking a 15% hit.
Then A2 flogs off Dairyowkrs and Talbot at distressed value of $50m. That means they have now spent $265m. A2 can't flog off some of the auckland properties because Synlait have already sold them and they are on lease.
So, for $265 They get Dunsdandel, Pokeno and they retain Mataura. Three facilities. Three facilities to get SAMR on.
(Lets not mention the subordinated bond holders because I reckon they are now sweating blood).
And that's worse case. But lets remember China Animal Husbandry Group have a stake in Mataura. They could be convinced to chuck $50m or so into the pot to get a stake in Pokeno/Dunsandel as this will help assure safe supply of needed product into china (who will be learning from America that they can't produce IF on their own). So it may only end up cosing a2 $200m or so.
Just a small technical matter but what you suggest above Minimoke is normally done by receivers, not liquidators. I agree, if this plays out as you suggest, its highly likely any receiver appointed by the bank would continue to trade the company and try and sell it as a going concern. On the balance of probabilities, you would think a JV between Bright Dairy and ATM would be in a truly commanding position to negotiate an extremely attractive price and bondholders and shareholders in Synlait would be in an incredibly weak position.
On the other hand, would the market support another $200m capital raise ? Does the company have sufficient credibility left to tap the capital markets for that sort of amount ?
Quote from: Basil on Sep 18, 2023, 12:08 PMJust a small technical matter but what you suggest above Minimoke is normally done by receivers, not liquidators. I agree, if this plays out as you suggest, its highly likely any receiver appointed by the bank would continue to trade the company and try and sell it as a going concern. On the balance of probabilities, you would think a JV between Bright Dairy and ATM would be in a truly commanding position to negotiate an extremely attractive price and bondholders and shareholders in Synlait would be in an incredibly weak position.
On the other hand, would the market support another $200m capital raise ? Does the company have sufficient credibility left to tap the capital markets for that sort of amount ?
Why would there to be a meed fopr a capital raise?
Banks wil just want their money back. They won't care about shareholders, bondholders or trade payables. Just their $350m
Of which A2 could do it out of their current $800m cash on hand.
I think we need to acknowledge there is a chance Synlait might try and trade their way through this and if so it would appear likely the banks will want to see their debt substantially reduced. Whether the market would support a capital raise, that is quite another matter.
Maybe the banks give them some room to accommodate a recovery as is? I think shareholders would be "very brave indeed" to tip more money into Synlait with the current directors and management team.
I agree this has all the makings of a train wreck. Synlait report next week on 25th.
Quote from: Basil on Sep 18, 2023, 12:46 PMI think we need to acknowledge there is a chance Synlait might try and trade their way through this and if so it would appear likely the banks will want to see their debt substantially reduced. Whether the market would support a capital raise, that is quite another matter.
Maybe the banks give them some room to accommodate a recovery as is? I think shareholders would be "very brave indeed" to tip more money into Synlait with the current directors and management team.
I agree this has all the makings of a train wreck. Synlait report next week on 25th.
Synlait been an impending train wreck for many years eh Basil ......told you so years ago and you listened and sold your shares for $12.80 or something like that
Jeez, $12.80 seems to be 10 times the current price
Quote from: Basil on Sep 18, 2023, 12:46 PMI think we need to acknowledge there is a chance Synlait might try and trade their way through this and if so it would appear likely the banks will want to see their debt substantially reduced. Whether the market would support a capital raise, that is quite another matter.
Maybe the banks give them some room to accommodate a recovery as is? I think shareholders would be "very brave indeed" to tip more money into Synlait with the current directors and management team.
I agree this has all the makings of a train wreck. Synlait report next week on 25th.
Oh - you meant Synliat doing another Capital raise. I can't see that working. A2 with its 20% shareholding is unlikely yo have an appetite for it. Why spend $40m on a deprecating distressed asset when you could spend $250m for the whole kit and caboodle.
At this point I think the banks would take any opportunity to get as much of their money out as possible.
SML still havent announced their new international customer. There has been no news on the sale of Dairy/works / Talbot and there has been no market up date - so results reported next week will be in range of "net loss of ($5) million to a net profit of $5 million". Of which I am picking it will be on the low side. And even if it is on the high side, with a $5, annual profit that debt isnt going to get paid down very quickly.
Then there is added risk of China market down turn which may also be impacting on the international customer - its not as if the banks have a rosey outlook.
And tie that into absolutely hopeless ESG led management and hands off Board - its a struggle to find any positives.
A2 hits an all time low today at $4.46.
They completed there share buy back at an average price of $6.87.
So no dividend, no buy back, no acquisitions on the horizon and $800m in the bank.
Time for the whole Board to go!
The arrogance of the board, never paying a dividend and yet throwing shareholders money around buying the shares back at more than 30 times next years earnings, (at the time), is breathtaking.
Still trades at 20 times average brokers forecast FY24 earnings which are forecasted to be little changed from FY23, where's the growth ? https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/finances/
Just as well earnings are going to come roaring back in FY25 and beyond, or are they ?
Quote from: Minimoke on Oct 03, 2023, 02:29 PMA2 hits an all time low today at $4.46.
They completed there share buy back at an average price of $6.87.
That is a bit of a shocker. I get it that a buyback increases EPS, and assuming NPAT and the P/E ratio is maintained, then we get an increasing share price. BUT my understanding is that these should be done when a stock is undervalued. On what basis do they think it is undervalued? I would like to see their workings and logic. Given the buyback price exceeds NTA then this is NTA dilutive to remaining shareholders which is not good....although given the number of shares on issue, any such adjustments may be minimal.
Quote from: Minimoke on Oct 03, 2023, 02:29 PMA2 hits an all time low today at $4.46.
All time low vor the year - maybe. Zum of us have memories that go back rather vurther than that!
Quote from: Basil on Oct 03, 2023, 02:51 PMThe arrogance of the board, never paying a dividend and yet throwing shareholders money around buying the shares back at more than 30 times next years earnings, (at the time), is breathtaking
Still trades at 20 times average brokers forecast FY24 earnings which are forecasted to be little changed from FY23, where's the growth ? https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/finances/
Just as well earnings are going to come roaring back in FY25 and beyond, or are they ?
Exactly. At 'Vour Veevty', in todays market, vith an all A2 eggs in a vone basket profit base (China)? Theez company eez grossly overvalued - a zell. Vrom a pilot who haz zeen many high flyers vall vrom the sky.
RB
Morningstar, in its NZ Equity Market Outlook for the fourth quarter, singled out a2 Milk as a "top pick".
"There is much to like about a2 Milk, notably in China, the key battleground," Morningstar said. A2's share of Chinese-language-labelled infant formula continues to grow, supported by the a2 'Platinum' brand, it said.
"We forecast 9% annual revenue gains to fiscal 2028 as channel inventory levels normalize and market share increases, alongside improved sales of higher-margin English-label product and operating leverage from higher revenue," it said.
A2 Milk finished steady at $4.50.
Morningstar also singled out power company Manawa (down 7 cents at $4.48) and casino operator Sky City (unchanged at $1.90) as "top picks" for the quarter.
Quote from: Red Baron on Oct 06, 2023, 08:32 AMAll time low vor the year - maybe. Zum of us have memories that go back rather vurther than that!
Exactly. At 'Vour Veevty', in todays market, vith an all A2 eggs in a vone basket profit base (China)? Theez company eez grossly overvalued - a zell. Vrom a pilot who haz zeen many high flyers vall vrom the sky.
RB
Yes - a bit of an exageration on my part. Indeed Since July 2017!
https://stocktalk.co.nz/index.php?action=dlattach;attach=1145;image
BusinessDesk article this morning that doesn't add much clarity.
Key points:
A2 Milks contract cancellation is probably an attempt to create opportunity to renegotiate how much product they take from Synlait. It's only the exclusivity aspect they want gone, not the contract.
A takeover by A2 of Synlait didn't make sense for A2. Too many facets of Synlait's operations are not core to A2's strategy. Bright and other large holders are unlikely to agree.
Synlait may yet be to forced to sell the Dunsandel plant. Dunsandel would be attractive to anyone doing infant formula in China because of its Chinese formula registration.
If Synlait loses exclusivity rights with A2 the effect won't be felt for some time, and it would still have a product many other companies would want.
Talbot Forest and Dairyworks had not added the expected value and Synlait was better off focusing on manufacturing. However; there appears to be little buyer interest in either.
Quote from: Hectorplains on Oct 06, 2023, 10:03 AMBusinessDesk article this morning that doesn't add much clarity.
Key points:
A2 Milks contract cancellation is probably an attempt to create opportunity to renegotiate how much product they take from Synlait. It's only the exclusivity aspect they want gone, not the contract.
A takeover by A2 of Synlait didn't make sense for A2. Too many facets of Synlait's operations are not core to A2's strategy. Bright and other large holders are unlikely to agree.
Synlait may yet be to forced to sell the Dunsandel plant. Dunsandel would be attractive to anyone doing infant formula in China because of its Chinese formula registration.
If Synlait loses exclusivity rights with A2 the effect won't be felt for some time, and it would still have a product many other companies would want.
Talbot Forest and Dairyworks had not added the expected value and Synlait was better off focusing on manufacturing. However; there appears to be little buyer interest in either.
There needs to be strong buyer interst because SML have to find $130m and have it in the bank acount by the end of March - which in reality isn't very far away at all.
So leaves the possibility of Dunsandel being put on the blocks - which would be a decent buy for A2 at the right price. Synlait could then become a supplier to abbot out of Pokeno. Dunsandell is not that far from Mataura so some synergies could come into play.
A2 at $4.25 today. Lowest point in 5 years. The market has well and truly fallen out of love with a profitable cash rich company. Su remakes that buy back look expensive!
Quote from: Ferg on Oct 03, 2023, 10:10 PMThat is a bit of a shocker. I get it that a buyback increases EPS
Only if the shares are cancelled. Often times they are simply held as Treasury stock and then handed out to management and employees as performance shares.
Quote from: Minimoke on Oct 26, 2023, 11:31 AMA2 at $4.25 today. Lowest point in 5 years. The market has well and truly fallen out of love with a profitable cash rich company. Su remakes that buy back look expensive!
Radio silence on MVM new boiler etc... They're supposed to be firing it up in November.
Quote from: Minimoke on Oct 26, 2023, 11:31 AMA2 at $4.25 today. Lowest point in 5 years. The market has well and truly fallen out of love with a profitable cash rich company. Su remakes that buy back look expensive!
The directors are absolute Muppets. Buying back the shares and artificially forcing the share price up so they ended up buying on an average price on a forward PE of 30, the same forward PE it used to be on when growing really strongly under Babbage's leadership many, many years ago. Absolutely idiotic that they play fast and loose with shareholders capital like that without ever paying a dividend. The board are an absolute disgrace and think they know capital markets better than real professionals. They should stick to their knitting and focus on tasks they have a very small degree of skill in and leave decisions about what's a fair share price to professional's who actually know what they're doing. This is now a low growth company and deserves to be trading on a multiple in the early teens. Average broker forecast is eps of 22 cents next year. Send me a PM and wake me up when it gets down to $2.50. Plenty more pain to come for shareholders in this one, in my opinion.
Mataura Valley is testing the new electric boiler. Yesterday was lifting a pressure relief valve.
It serves as a safety device, protecting the system from overpressure conditions. Testing was successful and is part of statutory compliance. Still no news on when it comes into commercial operation though.
Scott Waddell, the Project Manager for MVM, has been nominated as a finalist for the Change Maker Award at the NZ Sustainable Business Network Awards for 2023. The Change Maker Award celebrates a young person who is driving sustainability change within their organisation or the wider community. Waddell has driven the change of a not particularly old and perfectly functional boiler over to a new electric one. Dimmer beings, like myself, might dismiss this as a waste of time and resources. This 'sustainability' change won't decrease production costs or drive any greater production efficiency. Still I'm sure shareholders will be stoked that with a multitude of problems at MVM (like an EBITDA loss of $26.5 million in Y23) they've got a guy whose solved one that didn't even exist. Magnificent, surely he's a shoe in for the win then?
...and Hector you me and others threw a few million into the pot to help out (corporate welfare)
Presentation for todays ASM
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/421740/407347.pdf
Impressive market share gains in China IF in an overall declining market...... low single digit growth expected in future.
Not much mention of USA.
I'm not enthused by this update...... and happy to have long since taken my gains on this one.
Quote from: Left Field on Nov 16, 2023, 09:44 AMPresentation for todays ASM
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/421740/407347.pdf
Impressive market share gains in China IF in an overall declining market...... low single digit growth expected in future.
Not much mention of USA.
I'm not enthused by this update...... and happy to have long since taken my gains on this one.
Yep, hard to be enthused by this company - unless one likes downtrends.
Interesting that most of their achievements come through Synlait (like the A2 Platinum) and as well their new grassfed formula into the US - and on the other hand they work hard on trying to strangle or kill this milking cow.
No info about their new relationship with Synlait either - or did this come in question time?
Will be interesting to watch whether they are able to slaughter the Synlait cow and still keep milking it or whether they manage to seemlessly transfer IP, export licences and production (with lost of know how as well) to their new very own MVM milking cow. Never understood their strategy to move from nimble and scaleable marketing company to owner and operator of milk factories owning heaps of stainless steel. No doubt the shareholders live in "interesting times".
One of these spectacles which is in my view much better enjoyed from the sidelines.
Quote from: BlackPeter on Nov 16, 2023, 01:07 PMNo info about their new relationship with Synlait either - or did this come in question time?
Indeed it did. Hearn was horribly awkward trying to deal with the question about the relationship with Synlait. He came over like Dad trying to explain to the kids why he's moving in with the secretary from work... whose closer to their age than his. Like he still loves Mum, and he always will but y'know...."
He started with saying the Synlait - A2 "two-way agreement" for many years worked "very successfully." However; in "recent months" delivery and performance dipped below what was satisfactory. (That really needs to be clarified. How so? Why the sudden change? )
The end of the exclusivity commitment was presented with the zen notion that it "should fall away." However; he was full of praise and gratitude for Synlait "for everything they've done to help build our business..."
Having warmed to the topic, he then decided he'd keep talking but stop making sense. Like a rambling, drunken gangster. He channelled his inner Capone to give us: "We haven't committed to anything. It may involve Synlait; it may involve less of Synlait, more of Synlait. It may involve somebody else,
but we're not in any committed position to do harm to Synlait. We haven't cancelled any contracts. Synlait is doing all our volumes and will continue to do so for months to come regardless of what happens ... years to come probably."
You'd have thought that the question was nearly as predictable as Friday follows Thursday but he handled it like a blindside. If this is symptomatic of the level of communication that's been brought to the table, no wonder then the mediation was a failure.
Great post, thanks Hector...
At the same time ATM has been touting its cash reserves and need for further acquisitions to expand its production needs and "supply chain rationalization" while a recent NBR article headlined, "A2 Milk eyes 'large outlay of capital' on acquisitions"..
Possibly ATM is softening up SML for a takeover offer. Time will tell.
Quote from: Hectorplains on Nov 16, 2023, 10:55 PMIndeed it did. Hearn was horribly awkward trying to deal with the question about the relationship with Synlait. He came over like Dad trying to explain to the kids why he's moving in with the secretary from work... whose closer to their age than his. Like he still loves Mum, and he always will but y'know...."
He started with saying the Synlait - A2 "two-way agreement" for many years worked "very successfully." However; in "recent months" delivery and performance dipped below what was satisfactory. (That really needs to be clarified. How so? Why the sudden change? )
The end of the exclusivity commitment was presented with the zen notion that it "should fall away." However; he was full of praise and gratitude for Synlait "for everything they've done to help build our business..."
Having warmed to the topic, he then decided he'd keep talking but stop making sense. Like a rambling, drunken gangster. He channelled his inner Capone to give us: "We haven't committed to anything. It may involve Synlait; it may involve less of Synlait, more of Synlait. It may involve somebody else, but we're not in any committed position to do harm to Synlait. We haven't cancelled any contracts. Synlait is doing all our volumes and will continue to do so for months to come regardless of what happens ... years to come probably."
You'd have thought that the question was nearly as predictable as Friday follows Thursday but he handled it like a blindside. If this is symptomatic of the level of communication that's been brought to the table, no wonder then the mediation was a failure.
I fully don't understand where that relationship is at, and what A2's strategy is for sourcing/production.
Quote from: Sideshow Bob on Nov 17, 2023, 08:51 AMI fully don't understand where that relationship is at, and what A2's strategy is for sourcing/production.
I think you are not alone :) ;
To possibly answer the confusion and conflict re the A2M and SML I turned to Hotcopper.
Interesting background here;
Source; https://hotcopper.com.au/threads/ann-cancellation-of-synlait-exclusive-supply-rights.7638794/page-14?post_id=70946501
"Correspondence between A2 Milk chief executive David Bortolussi and former Synlait chair John Penno reveals serious tension between them over Penno's interest in a third-party supplier of product tracing technology.
The emails followed Penno's appointment of receivers in January 2022 to Signum Holdings, the parent company of brand protection software company Trust Codes, an important supplier to both milk processor Synlait and its prime customer.. A2 Milk....."
A letter from Bortolussi to Penno...said, "Any interruption would have a significant adverse impact on a2MC, particularly on our customer experience, counterfeit prevention, recall risk, and channel traceability," said Bortolussi.
The article outlines possible serious conflicts of interests by Penno and serious communication failures to keep A2M informed.
Interesting...
Craigs seeing things that others aren't - they have retained an overweight rating on A2 milk but lowered the target price 1.2% to $5.69 on slightly lower earnings estimates.
Quote from: Hectorplains on Nov 17, 2023, 10:53 PMCraigs seeing things that others aren't - they have retained an overweight rating on A2 milk but lowered the target price 1.2% to $5.69 on slightly lower earnings estimates.
Lets face it - A2M is a pure hope and speculation game. The fundamentals are clearly against the company, but sure - nobody can predict in which direction the hypewave might swap.
Quote from: BlackPeter on Nov 18, 2023, 11:27 AMLets face it - A2M is a pure hope and speculation game. The fundamentals are clearly against the company, but sure - nobody can predict in which direction the hypewave might swap.
Hardly as a company with a huge cash balance which has been around for a long time, they also own a stainless steel production plant and are looking to add to that. Will eventually become a boring dividend paying dairy company like some of their competitors. Last time their profit was running at current levels the sp was around $8 before it had its hyped run up to $21, will be back to those profit levels around 2026 ( Same levels as when it was $21) Gaining a larger piece of a smaller pie is a pretty good achievement.
Quote from: Breezy on Nov 18, 2023, 02:14 PMHardly as a company with a huge cash balance which has been around for a long time, they also own a stainless steel production plant and are looking to add to that. Will eventually become a boring dividend paying dairy company like some of their competitors. Last time their profit was running at current levels the sp was around $8 before it had its hyped run up to $21, will be back to those profit levels around 2026 ( Same levels as when it was $21) Gaining a larger piece of a smaller pie is a pretty good achievement.
You just forget that ATM was always priced as "growth company" with unlimited scalability (due to its previous marketing only strategy). They changed their strategy, given that growth did not work. Today it is just another boring and not scalable milk processor (more milk, more stainless steel) with a forward PE of 16 (at the current low SP). A fair PE for a not growing agricultural company might be around 10, So - a share price of $2.40 would still not sound cheap, but o.k. Everything above that is hype.
To get back to $8 you would either need a lot of credible growth (and I don't see, where this is supposed to come from with China shrinking) ... or a ton of hype.
And yes, I heard for the better part of a decade how much worth ATM is due to its cash reserves. Did you ever do the numbers how much cash per share they really hold? At last FY it was roughly 60 cents per share, and clearly - the board hasn't demonstrated yet that they know what to do with money (other than wasting it). So, if you like add that to the PE based SP as dead capital, but really - what are 60 cents cash per share worth if the board does not know how to make money with it? So far they only demonstrated that they know how to pump hype and they know how to waste money.
Good luck with your investment, I think you will need it.
Quote from: BlackPeter on Nov 18, 2023, 05:22 PMYou just forget that ATM was always priced as "growth company" with unlimited scalability (due to its previous marketing only strategy). They changed their strategy, given that growth did not work. Today it is just another boring and not scalable milk processor (more milk, more stainless steel) with a forward PE of 16 (at the current low SP). A fair PE for a not growing agricultural company might be around 10, So - a share price of $2.40 would still not sound cheap, but o.k. Everything above that is hype.
To get back to $8 you would either need a lot of credible growth (and I don't see, where this is supposed to come from with China shrinking) ... or a ton of hype.
And yes, I heard for the better part of a decade how much worth ATM is due to its cash reserves. Did you ever do the numbers how much cash per share they really hold? At last FY it was roughly 60 cents per share, and clearly - the board hasn't demonstrated yet that they know what to do with money (other than wasting it). So, if you like add that to the PE based SP as dead capital, but really - what are 60 cents cash per share worth if the board does not know how to make money with it? So far they only demonstrated that they know how to pump hype and they know how to waste money.
Good luck with your investment, I think you will need it.
As an aside its actually over $1/share now and I think luck is a key factor in any stock market investment and I don't think any random participant on an anonymous share forum speaks with any absolute authority, just opinions and guesswork.
Quote from: Breezy on Nov 18, 2023, 05:41 PMAs an aside its actually over $1/share now and I think luck is a key factor in any stock market investment and I don't think any random participant on an anonymous share forum speaks with any absolute authority, just opinions and guesswork.
"As an aside its actually over $1/share now"
Is it? You want to show us your numbers?
FY2023 (page 87 of the annual report) lists $352m in cash and short term deposits. Shares outstanding are 723m (both numbers rounded to the third digit).
My old trustworthy table calculator tells me that this would be only 49 cents (well, 48.68 cents) per share. The number I used (60 cents) are based on FY 2022 (blame me for not updating my spreadsheet in real time) - i.e. it appears ATM's cash reserves actually got worse instead of better.
I would not like the trend, but hey - each to their own :) ;
Quote from: Breezy on Nov 18, 2023, 05:41 PMAs an aside its actually over $1/share now and I think luck is a key factor in any stock market investment and I don't think any random participant on an anonymous share forum speaks with any absolute authority, just opinions and guesswork.
Agreed you cannot trust randoms on the internet.....they should provide a source for their numbers. I presume this was your calc using the last AR?
Edit: image 1 has weighted average shares, image 2 has year end shares on issue.
Page 88 of the 2023 AR.
That is a weird interpretation of "cash reserves" to exclude cash on deposit for > 3 months.
Quote from: BlackPeter on Nov 18, 2023, 05:22 PMYou just forget that ATM was always priced as "growth company" with unlimited scalability...snip
Good luck with your investment, I think you will need it.
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/finances/
Yes, I tend to agree with almost all that. Currently trading on 19.3 times consensus forward eps of 22 cps.
What I find quite extraordinary is that the consensus price target is $5.99 which would place it on 27.2 times forward earnings, similar metrics to when it was growing strongly under Geoffrey Babbage's excellent leadership. Not sure what the average analyst is seeing or smoking that I'm not, but I'm not going to lose any sleep over it. For mine, I don't think there is any doubt it is growing at a much, much slower pace these days and deserves metrics commensurate with that new reality.
I am also extremely wary of being a shareholder of any company that's been around for quite a long time that thinks they have a "first mortgage" on all the very best idea's for using my shareholder cash and refuse to ever distribute any of it by way of dividend. I think it's clear to many that when the buy-back was going on it materially affected the share price northward, and they paid far too much in the end. Reckless wastefulness of shareholder funds that should have been paid out as a dividend in my opinion.
Genuine question. Whatever happened to the two shareholder class action lawsuits a while back ? Still gradually working their way through the legal system ? I still hold the view that you should take ATM's forward guidance with a grain of salt.
Quote from: Ferg on Nov 18, 2023, 06:14 PMAgreed you cannot trust randoms on the internet.....they should provide a source for their numbers. I presume this was your calc using the last AR?
Edit: image 1 has weighted average shares, image 2 has year end shares on issue.
Yep that's the one, over double the 49c quoted by BP, perhaps a new calculator is in order.
While it's still fashionable to bag ATM, and it's been an enduring fashion for very valid reasons for quite a long time, I think you'll find that none of the detractors have followed the company or are up to date with the market situation, financial position, ambitions, risks, or anything significant about the company for that matter.
Understandably so imo, why would anyone waste time investigating something that they've convinced themselves is a basket case and not worth a cent of their investment money. Perfectly sensible.
Quote from: Basil on Nov 18, 2023, 06:32 PMI am also extremely wary of being a shareholder of any company that's been around for quite a long time that thinks they have a "first mortgage" on all the very best idea's for using my shareholder cash and refuse to ever distribute any of it by way of dividend. I think it's clear to many that when the buy-back was going on it materially affected the share price northward, and they paid far too much in the end. Reckless wastefulness of shareholder funds that should have been paid out as a dividend in my opinion.
Agree 100%. The buyback was terrible.....right up there in terms of worst buybacks ever.
Regarding/exploring dividends:
Per the last AR they had $49m of imputation credits, which would support imputed gross dividends of $175m. Assuming they pay out 90% of cashflow after deducting capex, lease & loan payments that would leave a nett payment of circa ( $111 x 1.01 - $10 - $4 - $15m estimate = $83m x 90% = ) $75m nett -> $104m gross. This would be a dividend of 14.5c per share assuming 1% operating CF growth, no buybacks or changes to issued shares & $15m loan repayments p.a.
Given NZ imputation credits did not grow in 2023, and assuming they do not in future, then imputed dividends could be maintained for less than 2 years. They would need to start doing some profit transferring back to NZ to not only get more imputation credits, but to also take advantage of the 2% lower tax rate versus Oz. Many overseas companies have their head office in Ireland for good reason....surely more NZ companies could legitimately take advantage of our lower tax rate vs Oz, as HLG are currently doing. NZ is where the IP was developed.
Using a risk free rate of 8% and assuming a growth rate of 1% p.a., the dividend valuation model suggests an annual dividend of 14.5c would value the share around $2. Ouch. At the risk of stating the obvious, growth in EPS, FCF and IC's are needed for a) SP support and b) the theoretical value per the DVM to be anywhere near the current SP.
Quote from: Ferg on Nov 18, 2023, 07:22 PMAgree 100%. The buyback was terrible.....right up there in terms of worst buybacks ever.
Regarding/exploring dividends:
Per the last AR they had $49m of imputation credits, which would support imputed gross dividends of $175m. Assuming they pay out 90% of cashflow after deducting capex, lease & loan payments that would leave a nett payment of circa ( $111 x 1.01 - $10 - $4 - $15m estimate = $83m x 90% = ) $75m nett -> $104m gross. This would be a dividend of 14.5c per share assuming 1% operating CF growth, no buybacks or changes to issued shares & $15m loan repayments p.a.
Given NZ imputation credits did not grow in 2023, and assuming they do not in future, then imputed dividends could be maintained for less than 2 years. They would need to start doing some profit transferring back to NZ to not only get more imputation credits, but to also take advantage of the 2% lower tax rate versus Oz. Many overseas companies have their head office in Ireland for good reason....surely more NZ companies could legitimately take advantage of our lower tax rate vs Oz, as HLG are currently doing. NZ is where the IP was developed.
Using a risk free rate of 8% and assuming a growth rate of 1% p.a., the dividend valuation model suggests an annual dividend of 14.5c would value the share around $2. Ouch. At the risk of stating the obvious, growth in EPS, FCF and IC's are needed for a) SP support and b) the theoretical value per the DVM to be anywhere near the current SP.
Hey Ferg, lots of people seem to bag the company for not paying out the cash in bank to shareholders, or some other creative mechanism to return it to shareholders, but have you considered the ambition to own their supply chain and especially the SAMR?
It will cost a lot of money, fortunately they have a lot of money in the bank and next to no debt, and they might not need to reach out to shareholders to fund their ambition.
Some very poignant comments at the AGM from the departing Chair (a few 'shot across the bows comments', far more than years previous, are you aware of them? The company is changing tack, it's moving to control its end-to-end supply chain. That's not surprising considering their majority shareholders vested interests. (China)
Bagging ATM for a buyback that in TOTO turned out to be well above the prevailing market price, since and now, is like saying their crystal ball is broken. No company has a crystal ball on the market, no company can predict whether returning capital to shareholders is right-timed.
It seemed ok at the time, just didn't work out so well according to the market, but we shareholders do own a bit more of the company, even if we effectively paid a premium according to the market pricing now.
The thing I would like to see is that those who choose to comment on ATM are fully informed, up to date with financials, market, ambition, risks, etc. We cannot have a reasoned debate on the investment worth or otherwise while most of us are dwelling on the past, or a perception of the present.
Thanks for your comments Buzz.
For context I usually read/listen to the CEO and Chairmans report as well as pick the eyes out of the crucial pieces. I'm a big fan of using, and often work according to, your signature. I get what A2 is about. I read a lot of what is posted here and elsewhere and I certainly do not think they are 'just another boring milk company'. I understand the health benefits of non-A1 milk for certain people and populations, and I can see the growth opportunities. So whilst I consider myself somewhat informed, I would not consider myself "fully informed" given time commitments elsewhere and the number of investments I follow prevent me from spending much more time doing deep dives on ATM (or others). So whilst I try to keep up, I'm happy to have any gaps filled in. I did not see the Chairman speak so I did not see the 'shots across the bow'; I didn't pick up any such flavour from the reports. Care to share more on that?
Buyback: I'm on record earlier for questioning the price they paid for the buyback
relative to NTA. I wasn't questioning the timing of the price paid or their crystal ball - rather I questioned why they thought it was undervalued, especially when the SP of the day exceeded NTA. I said:
Quote...my understanding is that these should be done when a stock is undervalued. On what basis do they think it is undervalued? I would like to see their workings and logic. Given the buyback price exceeds NTA then this is NTA dilutive to remaining shareholders which is not good....although given the number of shares on issue, any such adjustments may be minimal.
I know it is a lot to expect a company to release their undervaluation calculations, although I note that KFL consider this to be when the SP is at a discount of 6% or more to their NTA. Yes I also said it was terrible - that was a) relative to NTA and b) with the benefit of hindsight relative to the SP.
For the dividends there was no criticism - merely some analysis to show meaningful imputed dividends were not possible and/or practical. The only judgement was that the level of dividend possible, assuming it could be maintained given the inputs of today, was insufficient to support the current SP in the current low growth environment. ATM signalled low single digit growth next FY - I worked with the lowest single digit. Certainly everyone wants more than that; IMO the USA and non-A1 angles are the keys to higher growth but China is crucial as the base of earnings. Growing share in a declining market is impressive, but that is not a good place to be.
Regarding investing in the future and owning the supply chain, I am all for that and you would have seen me post such comments elsewhere. However, I get the sense with ATM it is lots of wind and little delivery. They have been sitting on oodles of cash for quite a while.
In particular they talk about growth opportunities, M&A and prudent capital management etc; meanwhile they have been sitting on in excess of $800m 'cash reserves' since the 2020 year end. During which time they had positive operating cash flows for the last 4 years of $289m, $427m $203m & $111m. During this time $184m was invested into Synlait and $213 for MVM. Actions speak louder than words so you can forgive me for being somewhat sceptical. Their level of M&A activity and speed of delivery is glacial. I believe they have come through the Covid/Daigou fiasco a better company, but my fear is the pace of change executed versus what is needed feels sloth-like and/or extremely conservative. {Edit: I never thought I would see the day where I called a marketing oriented company 'extremely conservative' - but there it is!}
Please tell me about these 'shots across the bow' and where you see exciting growth opportunities for ATM.
Cheers
Quote from: Buzz on Nov 18, 2023, 08:49 PMHey Ferg, lots of people seem to bag the company for not paying out the cash in bank to shareholders, or some other creative mechanism to return it to shareholders, but have you considered the ambition to own their supply chain and especially the SAMR?
It will cost a lot of money, fortunately they have a lot of money in the bank and next to no debt, and they might not need to reach out to shareholders to fund their ambition.
Some very poignant comments at the AGM from the departing Chair (a few 'shot across the bows comments', far more than years previous, are you aware of them? The company is changing tack, it's moving to control its end-to-end supply chain. That's not surprising considering their majority shareholders vested interests. (China)
Bagging ATM for a buyback that in TOTO turned out to be well above the prevailing market price, since and now, is like saying their crystal ball is broken. No company has a crystal ball on the market, no company can predict whether returning capital to shareholders is right-timed.
It seemed ok at the time, just didn't work out so well according to the market, but we shareholders do own a bit more of the company, even if we effectively paid a premium according to the market pricing now.
The thing I would like to see is that those who choose to comment on ATM are fully informed, up to date with financials, market, ambition, risks, etc. We cannot have a reasoned debate on the investment worth or otherwise while most of us are dwelling on the past, or a perception of the present.
I'm reasonably informed on A2 and note their ambition to grow revenues to $2 billion and ebitda margin to be in the teens but improving year on year
So F26 will see $2billion sales and ebitda at say 17% which is $340m ...up from $220m in F23. That's pretty good growth eh.
That forecast a bit more bullish than guru analyst forecasts (msrketscreener) but whatever they should be producing an eps of 33/35 cents
And then one need to add on what they generate from any acquisitions
So with current share price close to multi year lows one can see why some punters are getting excited about the future and cashing in big time as the A2 strategy unfolds.
Quote from: Ferg on Nov 18, 2023, 10:02 PMBuyback: I'm on record earlier for questioning the price they paid for the buyback relative to NTA. I wasn't questioning the timing of the price paid or their crystal ball - rather I questioned why they thought it was undervalued, especially when the SP of the day exceeded NTA. I said:I know it is a lot to expect a company to release their undervaluation calculations, although I note that KFL consider this to be when the SP is at a discount of 6% or more to their NTA. Yes I also said it was terrible - that was a) relative to NTA and b) with the benefit of hindsight relative to the SP.
It seems like you have some valid points. For example capital management could be a bit more transparent. However, I'm somewhat puzzled by your criticism of the buyback. Yes, it always could be better. But why are you tying buyback to NTA? ATM is not a REIT. Pretty much any company except REITs and few others have SP higher then NTA. Sparks NTA currently $0.61 and they are on a middle of buyback at the moment. CNU did it recently with their NTA $1.60. KFL does not consider buyback when the SP is at discount of 6% or more to their NTA. It's 6% or more to
NAV. You do know the difference, right?
The timing or rather management of buyback also could be better, but at the time it looked reasonable. They announced it when SP was around lowest level in 2 years. It's not a surprise that SP went up during buyback and fall down after. Happens to many buybacks. FBU conducted buyback last year with average price $6.63 and where the SP now? So, I would not say ATM's share buyback was the worst ever. Not well managed - yes, worst - no.
And again, why some call ATM marketing company? Just because they use third party production facilities does not make them marketing company. Despite what some people here say, they own their products and intellectual property. Synlait does not own Platinum formula products or rights to it. It just holds license to manufacture for certain region. Apple does not manufacture iphones, Foxconn does. It does not make Apple a marketing company. Majority of companies in all industries around the world using third party manufacturers for their products. But it does not make all of them marketing companies.
I think you are right to question the validity of referring to the buyback relative to the NTA.
What really matters is the price they executed at relative to forward earnings and they paid a whopping 30 times forward earnings at the time. This is exactly the metrics the company was priced at when it was growing very strongly under Geoffrey Babbage's excellent leadership and is entirely inappropriate now the company is growing at a much lower rate....but what would I know, I've been saying this is overpriced since it was $21 years ago.
Quote from: CG on Nov 19, 2023, 01:01 PMKFL does not consider buyback when the SP is at discount of 6% or more to their NTA. It's 6% or more to NAV. You do know the difference, right?
Fair cop. NTA was loose phraseology on my part if we want to be precise about it, given KFL mention NAV. I kept with NTA given I knew the value was the same as NAV and I did not want to complicate the conversation. KFL has no intangible assets therefore NTA = NAV in this case for KFL.
Per their last annual report:
QuoteNET ASSET VALUE The net asset value of Kingfish as at 31 March 2023 was $1.40 per share (2022: $1.58) calculated as the net assets of $461,584,438 divided by the number of share
You likely have a differing interpretation of a marketing company and I acknowledge ATM is transitioning to manufacturing...but surely we have better things to discuss than NAV <> NTA when the values are the same, and what is a marketing company??
I will reiterate what I said earlier: any buyback in excess of NTA is NTA dilutive to shareholders. Fact.
Whether or not a buyback > NTA is an issue depends on ones personal perspective. I genuinely don't care about other companies buying back > NTA where I don't hold any shares - they can knock themselves out. I do like SBLK and DGL buybacks which are under NTA and I'm a holder. My personal opinion on ATM is that I don't like a buyback > NTA given I am a holder.
I'm still curious to see the calculations showing the buyback for ATM was on the basis the SP of the day was undervalued.....wouldn't you?
Quote from: Basil on Nov 19, 2023, 01:30 PMI think you are right to question the validity of referring to the buyback relative to the NTA.
What really matters is the price they executed at relative to forward earnings and they paid a whopping 30 times forward earnings at the time. This is exactly the metrics the company was priced at when it was growing very strongly under Geoffrey Babbage's excellent leadership and is entirely inappropriate now the company is growing at a much lower rate....but what would I know, I've been saying this is overpriced since it was $21 years ago.
Thanks Basil. Why do I like buyback < NTA? Because for a profitable company this is NTA accretive for remaining shareholders. Paying say 95c to secure $1 is effectively arbitrage and as such the SP is undervalued when using NTA. For me a SP < NTA is a potential indicator of good value, unless there are some structural issues with the business.
Whereas any buyback price > NTA for the same profitable company will be a PE multiple > 0 which is subject to opinions and interpretations as to whether or not that is good value. As we know one man's junk is another man's treasure...
Undervalued when undertook share buyback they say ...probably had their own views and probably asked the likes of what's a good value and then took comfort from consensus brokers targets which at time ranged from $4.9o to $9.45 with average of $6.64 ....and prevailing price below 6 bucks
Whatever ......directors and management always say share price doesn't reflect true value blah blah :)
Quote from: Ferg on Nov 19, 2023, 04:35 PMI'm still curious to see the calculations showing the buyback for ATM was on the basis the SP of the day was undervalued.....wouldn't you?
I think we'd all like to see that.
I get where you are coming from with the NTA angle on this and in the case of KFL, that 6% discount is about where we are at right now, but I digress.
My perspective is that to make a call on whether a company benefits by purchasing its own shares back at 30x forward earnings means making a call that there's very strong growth over the next 7-10 years.
Here's where I have a big problem with that. ATM directors have clearly demonstrated they have very, very low forward visibility on earnings even within a single year of forecasting, hence how they got themselves into so much hot water with 2 class action lawsuits. If they can't see one year ahead then quite obviously by extension, they can't see 7-10 years ahead so there's literally no basis whatsoever for paying 30 times forward earnings.
I believe it's an unhealthy thing for a board to retain all its earnings once its well established. Its very easy for the directors to develop an unhealthy level of hubris that they know better than shareholders how to invest the cash that could otherwise have legitimately been paid out as dividends either with or without imputation credits. I made good money from this on the way up and have been patiently waiting for many years for good value to reemerge. I'm going to keep waiting while the confirmed downtrend keeps playing out. The directors' actions with this buy-back do nothing to inspire me with confidence they know better than I do what shares are worth buying and when.
Quote from: CG on Nov 19, 2023, 01:01 PMIt seems like you have some valid points. For example capital management could be a bit more transparent. However, I'm somewhat puzzled by your criticism of the buyback. Yes, it always could be better. But why are you tying buyback to NTA? ATM is not a REIT. Pretty much any company except REITs and few others have SP higher then NTA. Sparks NTA currently $0.61 and they are on a middle of buyback at the moment. CNU did it recently with their NTA $1.60. KFL does not consider buyback when the SP is at discount of 6% or more to their NTA. It's 6% or more to NAV. You do know the difference, right?
The timing or rather management of buyback also could be better, but at the time it looked reasonable. They announced it when SP was around lowest level in 2 years. It's not a surprise that SP went up during buyback and fall down after. Happens to many buybacks. FBU conducted buyback last year with average price $6.63 and where the SP now? So, I would not say ATM's share buyback was the worst ever. Not well managed - yes, worst - no.
And again, why some call ATM marketing company? Just because they use third party production facilities does not make them marketing company. Despite what some people here say, they own their products and intellectual property. Synlait does not own Platinum formula products or rights to it. It just holds license to manufacture for certain region. Apple does not manufacture iphones, Foxconn does. It does not make Apple a marketing company. Majority of companies in all industries around the world using third party manufacturers for their products. But it does not make all of them marketing companies.
"Synlait does not own Platinum formula products or rights to it"
Well, I did not read the contracts and I presume never did you, but I remember that I talked some years ago at one of the Synlait company visits with Nigel Greenwood (who was at that stage still CFO for Synlait). He told me that Synlait holds the IP for A2 Platinum, and yes I was at that stage surprised how little real milk is in the can :);
So yes, some years ago, and things might have changed, but honestly - I would be surprised. if Synlait has given up their IP.
Just to be clear - I talk about the IP for the A2 Platinum Baby Formula (i.e x% fruitsugar, y% A2 milk powder, ...) .
Obviously - ATM holds some IP for methods to determine the A2 status for cow herds, but this is in this context quite irrelevant.
Quote from: Ferg on Nov 18, 2023, 10:02 PMPlease tell me about these 'shots across the bow' and where you see exciting growth opportunities for ATM.
Cheers
Hi Ferg, it was mainly during question time, a couple of moaners about the share price and the cash hoard. The outgoing Chair was more vocal than I've ever seen him, a bit testy even (hardly surprising as the quality of questions was pretty abysmal, imo). As usual it was more enlightening to chat with some of the Board after the formalities, although just a bit more colour rather than anything we hadn't already been told.
He correctly pointed out that no Board can dictate what the market share price is, and the Board is disappointed and thinks it's undervalued (with no insights given into how they calculate that, is there ever?). Some people conveniently forget ATM got slaughtered by Covid removing their main supply line into China, but that's fixed now. $1.59 billion revenue and improved on all financial metrics, Covid is behind us now, in a perverse way it was probably a good thing to expose the vulnerabilities of ATM.
The other point made about the cash hoard was the optionality that gives them for
acquisitions, and the point was re-enforced a number of times and made in the same breath as being the only top 10 supplier who doesn't control the manufacturing process, and protecting the golden goose SAMR, albeit they already have 19% holding in Synlait. I think it's code for them going after Synlait, though in what form or when that might happen with Bright Diary in the mix, who knows.
As for 'exciting' growth, well I'd be happy with the forecast growth and revenue projections of $2b in 2026, assuming all other metrics improved in line with revenue. This is a growing company, very well established in its core China market, next to no debt, huge cash balance, growing market share even as the overall market is declining. Diversifying products and categories. Ironically increasing marketing spend (after the previous CEO was criticised for it), which is paying off. Expanding into USA and other Asia markets. Still solid market in Aus and NZ.
In that timeframe to 2026 the current combined ~$50m losses on USA and MVM should be reversed, so those retained earnings are probably being factored in to their financial projections, along with new revenues.
The mentions of the class action (there is only one, now combined) may take some time yet to play out and even if it went against ATM, they have insurance to cover some or all of the potential costs. It might not go against them either, I'd expect if ATM thought they were likely to lose, an out of court settlement would be negotiated, to avoid 'conviction' blame, and the insurers would certainly be in the room for that!
While I'm at it, frequent criticism of the Board and management may have failed to realise many of the Board and pretty much all of the ELT management have changed since Covid. The CEO has built up an impressive and very capable management team. The confidence in the room seems inspired.
Anyway, I like ATM and think at the current price it's worth having a modest % of a balanced portfolio. I am not looking in the rearview mirror with ATM, I don't care whether it ever gets back to the old share price, that's not the point imo.
Just to add a note re the class action, there are still 2 in the mix, the NZ one is on a stay waiting the outcome of the Aussie one (There were 2 Aussie ones but now combined)
Quote from: Buzz on Nov 19, 2023, 07:44 PMThe mentions of the class action (there is only one, now combined) may take some time yet to play out and even if it went against ATM, they have insurance to cover some or all of the potential costs. It might not go against them either, I'd expect if ATM thought they were likely to lose, an out of court settlement would be negotiated, to avoid 'conviction' blame, and the insurers would certainly be in the room for that!
I don't recall A2 announcing that they have insurance cover for the class action? The only clue I can see is that they don't appear to be paying legal expenses on the case. Insurance covering the claim is not necessarily a given and I can't think of a class action here or in Australia where a company has come out and confirmed any level of cover prior to settlement. So, the class action is not a zero risk, how much risk is baked into the current share price is anyone's guess.
Quote from: Ferg on Nov 19, 2023, 04:35 PMFair cop. NTA was loose phraseology on my part if we want to be precise about it, given KFL mention NAV. I kept with NTA given I knew the value was the same as NAV and I did not want to complicate the conversation. KFL has no intangible assets therefore NTA = NAV in this case for KFL.
Per their last annual report:
You likely have a differing interpretation of a marketing company and I acknowledge ATM is transitioning to manufacturing...but surely we have better things to discuss than NAV <> NTA when the values are the same, and what is a marketing company??
NTA = NAV in case of KFL is absolutely correct. Because it's an investment company. In case of ATM it is not. There for comparison of NTA between these companies does not make any sense. Here is the quote from KFL website - "The NAV per share is calculated by taking the total number of shares held in a portfolio company, multiplied by the share price at market close. This calculation is completed for each company in the portfolio and added to the cash amount held to get the gross asset value (GAV) of the portfolio. Tax and other expenses are deducted from the GAV to provide the NAV. The NAV is divided by the number of shares on issue (excluding treasury stock) to provide the NAV per share."
So, effectively you are comparing market value of companies per share hold by KFL to net tangible assets per share hold by ATM. If you want compare NTAs you need calculate and sum NTAs of all companies hold by KFL per share. If you do that you might be surprised how low that value will be to compare to NAV value. Yes, we can discuss other things but also need to point out at something that doesn't make sense.
Quote from: Ferg on Nov 19, 2023, 04:35 PMI will reiterate what I said earlier: any buyback in excess of NTA is NTA dilutive to shareholders. Fact.
Whether or not a buyback > NTA is an issue depends on ones personal perspective. I genuinely don't care about other companies buying back > NTA where I don't hold any shares - they can knock themselves out. I do like SBLK and DGL buybacks which are under NTA and I'm a holder. My personal opinion on ATM is that I don't like a buyback > NTA given I am a holder.
I'm still curious to see the calculations showing the buyback for ATM was on the basis the SP of the day was undervalued.....wouldn't you?
That is not a fact but rather quite opposite. Share dilution is when a company issues additional stock and that decrease your ownership percentage. Buyback in any form on another hand will increase it. However, buyback above NTA will decrease NTA value per share but in any case increase earnings per share. That is a fact. Btw, can't say anything about SBLK but DGL (ASX I presume) so far made buyback transactions about 15% above NTA not below.
I don't think you will see or find any calculations showing the buyback for ATM was undervalued on the basis the SP. After all they were buying on an open market. Everyone is using there own methodology and expectations. I don't know why ATM management thought it was undervalued. Need ask them. I think it was about right at time of share buyback and I think it should be about the same value now. Also I think it was overpriced at $20. But this is how market works.
Quote from: BlackPeter on Nov 19, 2023, 06:02 PM"Synlait does not own Platinum formula products or rights to it"
Well, I did not read the contracts and I presume never did you, but I remember that I talked some years ago at one of the Synlait company visits with Nigel Greenwood (who was at that stage still CFO for Synlait). He told me that Synlait holds the IP for A2 Platinum, and yes I was at that stage surprised how little real milk is in the can :);
So yes, some years ago, and things might have changed, but honestly - I would be surprised. if Synlait has given up their IP.
Just to be clear - I talk about the IP for the A2 Platinum Baby Formula (i.e x% fruitsugar, y% A2 milk powder, ...) .
Obviously - ATM holds some IP for methods to determine the A2 status for cow herds, but this is in this context quite irrelevant.
From ATM website - "The a2 Milk Company Limited owns and commercializes a suite of intellectual property relating to the marketing and production of a2™ branded products. Contact The a2 Milk Company Limited (info@a2milk.com) for more information about the intellectual property associated with a2™ branded products."
Last time I checked a2 Platinum trademark belongs to ATM. I'm sure ATM can manufacture a2 Platinum anywhere they what outside Synlait facilities. But I doubt Synlait allowed to sell a single can of it anywhere in the world.
Quote from: CG on Nov 19, 2023, 10:59 PMFrom ATM website - "The a2 Milk Company Limited owns and commercializes a suite of intellectual property relating to the marketing and production of a2™ branded products. Contact The a2 Milk Company Limited (info@a2milk.com) for more information about the intellectual property associated with a2™ branded products."
Last time I checked a2 Platinum trademark belongs to ATM. I'm sure ATM can manufacture a2 Platinum anywhere they what outside Synlait facilities. But I doubt Synlait allowed to sell a single can of it anywhere in the world.
Synlait and A2 are bickering at present as to exclusivity of A2's IMF production. That agreement precluded A2 producing their formula elsewhere. Until that is sorted A2 can't manufacture where or with whom they like.
As SML holds the Chinese regulatory State Administration for Market Regulation (SAMR) licence which is attached to Synlait's Dunsandel manufacturing facilities.
The licence is for The a2 Milk Company's Chinese labelled 至初® Infant Formula (stages one, two and three), SML will continue to manufacture those products for A2 at least for the length of that licence (currently expiring September 2027).
Quote from: CG on Nov 19, 2023, 10:59 PMFrom ATM website - "The a2 Milk Company Limited owns and commercializes a suite of intellectual property relating to the marketing and production of a2™ branded products. Contact The a2 Milk Company Limited (info@a2milk.com) for more information about the intellectual property associated with a2™ branded products."
Last time I checked a2 Platinum trademark belongs to ATM. I'm sure ATM can manufacture a2 Platinum anywhere they what outside Synlait facilities. But I doubt Synlait allowed to sell a single can of it anywhere in the world.
Quite beside the point. Of course will the A2 Platinum trademark belong to ATM. The question is - who holds the IP for the recipe?
Still in 2018 this was Synlait. Do you have any evidence that this changed since then?
https://www.farmersweekly.co.nz/news/fonterra-a2-deal-okay-by-synlait/
Look, if things would be as easy as you suggest, than I am wondering, why these mediation talks between Synlait and ATM are so hard that they had to go into arbitration.
I suppose parts of the IP (like e.g. the brand, as you suggested) belongs to ATM and part of the IP (like the recipe) belong to Synlait. The whole thing will be muddied by additional agreements between the both companies (like the exclusive supply agreement), which didn't matter too much, as long as the relationship between them was good. Now the gloves are off.
https://businessdesk.co.nz/article/primary-sector/a2-milk-and-synlait-head-to-arbitration-after-good-faith-talks-hit-stalemate (paywalled)
Always a bit scary for shareholders if your company stands before court proceedings where only one clear winner will emerge: The lawyers!
But I guess lets first see how this arbitration ends. Quite interesting and relaxing to watch this stuff from the sidelines.
Quote from: Breezy on Nov 19, 2023, 09:18 PMJust to add a note re the class action, there are still 2 in the mix, the NZ one is on a stay waiting the outcome of the Aussie one (There were 2 Aussie ones but now combined)
I presume you have joined in with the N.Z. one awaiting the outcome of the Australian case. I followed what they said that year closely and I think there's a prima facie case to answer. Best wishes with it for a successful outcome. You and other shareholders deserved better from ATM than the forecasting fiasco you got that year.
Quote from: Basil on Nov 20, 2023, 09:22 AMI presume you have joined in with the N.Z. one awaiting the outcome of the Australian case. I followed what they said that year closely and I think there's a prima facie case to answer. Best wishes with it for a successful outcome. You and other shareholders deserved better from ATM than the forecasting fiasco you got that year.
Thanks and all shareholders are included in the Aussie one at this point until a further court date at which point you can opt out, im in both at the moment but will most likely opt out of the Aussie one as double commissions would be payable and the NZ one has lower commissions. I'm not expecting anything out of it but would be very grateful if something come along although my situation is rather more complex due to the very large number of transactions during that period.
Quote from: Hectorplains on Nov 20, 2023, 08:32 AMSynlait and A2 are bickering at present as to exclusivity of A2's IMF production. That agreement precluded A2 producing their formula elsewhere. Until that is sorted A2 can't manufacture where or with whom they like.
As SML holds the Chinese regulatory State Administration for Market Regulation (SAMR) licence which is attached to Synlait's Dunsandel manufacturing facilities. The licence is for The a2 Milk Company's Chinese labelled 至初® Infant Formula (stages one, two and three), SML will continue to manufacture those products for A2 at least for the length of that licence (currently expiring September 2027).
Dear Hectorplains and others, please read carefully the following statement below from ATM, especially the bit that is in bold. Synlait has exclusive rights for manufacturing and supply for sale in China and ANZ. And I do not dispute that. For the rest of the world ATM can manufacture its products wherever it wish. Plus, my post wasn't about exclusivity rights to manufacture it was about who owned rights to a2 branded products. And SAMR license doesn't play any role in this
"The a2 Milk Company Limited (a2MC, the Company) advises that after market hours on Friday, 15 September it provided Synlait Milk Limited (Synlait) with written notice cancelling the exclusive manufacturing and supply rights enjoyed by Synlait in respect of stages 1 to 3 of a2MC's current infant milk formula (IMF) products (being a2 Platinum® and a2 至初®)
for sale by a2MC in the markets of China, Australia and New Zealand. Stage 4 IMF and other a2MC products supplied by Synlait are not subject to exclusivity. Synlait has advised that it is considering the notice of cancellation, it reserves its rights, and it will respond formally in due course."
Quote from: BlackPeter on Nov 20, 2023, 08:50 AMQuite beside the point. Of course will the A2 Platinum trademark belong to ATM. The question is - who holds the IP for the recipe?
Still in 2018 this was Synlait. Do you have any evidence that this changed since then?
https://www.farmersweekly.co.nz/news/fonterra-a2-deal-okay-by-synlait/
Look, if things would be as easy as you suggest, than I am wondering, why these mediation talks between Synlait and ATM are so hard that they had to go into arbitration.
I suppose parts of the IP (like e.g. the brand, as you suggested) belongs to ATM and part of the IP (like the recipe) belong to Synlait. The whole thing will be muddied by additional agreements between the both companies (like the exclusive supply agreement), which didn't matter too much, as long as the relationship between them was good. Now the gloves are off.
https://businessdesk.co.nz/article/primary-sector/a2-milk-and-synlait-head-to-arbitration-after-good-faith-talks-hit-stalemate (paywalled)
Always a bit scary for shareholders if your company stands before court proceedings where only one clear winner will emerge: The lawyers!
But I guess lets first see how this arbitration ends. Quite interesting and relaxing to watch this stuff from the sidelines.
"a2 Milk Company Limited owns ... intellectual property to ... production of a2™ branded products" is beside the point? You claim that Synlait holds IP for a2 Platinum production and I showed you that it's ATM own it. Where in the article you provided it says that Synlait holds IPs to a2 Platinum or own the recipes? I couldn't find. The only thing I found is before they engaged with Synlait they were solely an IP, brands and marketing business.
Exclusivity rights dispute has absolutely nothing to do with IP rights.
CG: let's take the NTA/NAV conversation offline - you are not quoting me correctly and you are effectively arguing against yourself. Show me where I said buybacks were share dilutive, or where I said we should compare NTA of ATM to NTA of KFL. I didn't. You state buybacks > NTA reduce NTA for remaining shareholders which is what I said (quote: "NTA dilutive"). Any further discussion will pollute this thread to no-one's benefit plus it is now off topic. I have sent you a PM.
An interesting video where Madison Reidy from Markets with Madison interviews ATM CEO David Bortolussi. Winner posted this over at ShareTrader:
Quote from: Hectorplains on Nov 15, 2023, 07:57 PMScott Waddell, the Project Manager for MVM, has been nominated as a finalist for the Change Maker Award at the NZ Sustainable Business Network Awards for 2023. The Change Maker Award celebrates a young person who is driving sustainability change within their organisation or the wider community. Waddell has driven the change of a not particularly old and perfectly functional boiler over to a new electric one. Dimmer beings, like myself, might dismiss this as a waste of time and resources. This 'sustainability' change won't decrease production costs or drive any greater production efficiency. Still I'm sure shareholders will be stoked that with a multitude of problems at MVM (like an EBITDA loss of $26.5 million in Y23) they've got a guy whose solved one that didn't even exist. Magnificent, surely he's a shoe in for the win then?
Yay, as predicted Waddell won the Change Maker Award yesterday. That probably explains why he's too busy to reply to emails. Still no announcement as to when this white elephant, sorry boiler, comes into commercial use.
Ferg and Winner thanks for bringing the video to our attention. A lot of useful info in it.
Alluded to in the Video was A2m's huge marketing spend in China that has not only won them significant market share gains over the last year, but also now this award...... up there with the big boys Coca Cola and Harley Davidson no less!
Best expression of a brand on social media channels
Gold – The Coca-Cola Company
Silver – The a2 Milk Company Limited and Ylab
Bronze – HSBC Life (Singapore) and PHD Media
Highly commended – Harley-Davidson and MADJOR
Highly commended – Newell Papermate Pens and SGK Inc
https://www.transformmagazine.net/articles/2023/winners-announced-for-transform-awards-asia-2023/
I guess if you spend $260 Mill in advertising you better get something to show for it!
Seems Forsyth Barr bullish on ATM
OUTPERFORM
The a2 Milk Company (ATM) is changing its stripes. It has well-publicised strategic intentions to vertically integrate its supply chain, be it through M&A, organic investment at Mataura Valley Milk (MVM), or JVs/alliances. It's not a matter of if, it's a matter of when. Our detailed scenario analysis assesses how ATM would evolve should it purchase SynlaitMilk's (SML) Dunsandel asset. We acknowledge this isn't necessarily likely but we think it would prove to be an attractive asset for ATM, helping to reduce supply chain risks (mainly regulatory), capture manufacturing margin (albeit we don't think group margins will notably improve), and drive EPS growth ahead of current consensus forecasts. We have also explored the ramifications should ATM pursue other NZ manufacturing sites. Given current undemanding valuation multiples, investors appear cautious on the potential implications of such a large investment. Our analysis supports our OUTPERFORM rating, and we believe the market is too cautious on the potential capex investment implications.
ATM will vertically integrate its supply chain in time — there are numerous options
One of ATM's five strategic pillars is to 'transform its supply chain' with the desire to: (1) expand China Label (CL) registered market access, (2) utilise MVM and invest in NZ capability, and (3) develop China supply capability. As part of all five pillars, it has stated it will, 'explore opportunities to accelerate strategy execution through M&A, JVs, and alliances'. The key quantitative targets related to its supply chain are access to at least three CL registrations and an expanded English Label (EL) IF portfolio. The key attraction is wider access to CL licenses; this makes sense to us as the company seeks to improve its competitive positioning over the long term, and reduce future regulatory supply chain risks. ATM has numerous viable options, including: (1) SML Dunsandel, (2) Bodco's blending & canning site, (3) other NZ based IF manufacturers (notably Yili or Yashili), (4) expedite MVM investment, and/or (5) invest in China.
A compelling option is to acquire SML's Dunsandel asset. We are not suggesting this is likely, but it does offer attractive qualities to ATM, particularly the all important regulatory licenses. We don't have a firm view on value but would expect a purchase price >NZ$400m. Our base case scenario suggests FY25 EPS accretion of ~+35% to +40% (fully cash funded), ROIC decline to ~16% (from ~17% in FY23), and a reduction in net cash balance to ~NZ$415m (from ~NZ$720m at FY23).
Valuation is relatively attractive; the market appears overly nervous on the capex implications
We have previously argued ATM's earnings multiple has been too high, particularly given the fundamental change in growth and returns as it morphs into a conventional consumer staples company. ATM is now trading on a 12 month forward PE of ~17x (~14x cash adjusted) and EV/EBIT of ~10x, ~-40% below its respective five year average multiples. It is now trading in-line with similar consumer staples peers on a PE basis and ~-20% EV/EBIT discount (both at record lows on a relative basis). We are now comfortable: (1) the step-change in ATM's business is being appropriately reflected in its share price, and (2) see relative valuation as attractive, particularly given our constructive view on medium-term growth (FY26 to FY23 EPS CAGR of ~+10%).
Currently ATM only 2% of my portfolio (thanks to profits taken) however, I fondly remember the days when it was 70%!!
Will continue watching and waiting for another confirmed uptrend.......... we need to see signs of good progress of diversification in the USA market IMO.
I rate Forr Bar as next to useless when it comes to any kind of analysis. They have had too many significant fails for me to value their opinions.
I disagree that A2m is unlikely to purchase Dunsandel.
Firstly I see Synlait as being a significantly distressed company. With limited options to repay pay bankers and virtually no options to repay bond holders. Synlait need to sell dairy works to repay bankers. They need to sell dunsandel to repay bondholders.
Given Dunsandel is more than likely going to end up fro sale. Who could buy? A2M have an ever increasing war chest of cash that they simply seem to consistently refuse to apply to any overseas opportunities. For years they have said "We can put our cash to better use than shareholders - via a dividend" but have failed to buy anything other than Matuara. So surely they must have been keeping their tinder dry until Dunsandel became as cheap as chips. Which it is now.
Bright Dairy I suspect will stand aside. Its not about bright dairy (or state farms) - its about centralised chinese government feeding its population and keeping their elites happy.
And then there are synergies that can be brought into play with Mataura. Have one NZ head of Manufacturing looking after both Dunsandel and Mataura. One, integrated computer system, one set of farm producer standards. Bring in cost efficiencies and create more competition for Fonterra but not west gold milk.
Quote from: Left Field on Jan 09, 2024, 08:15 AMwe need to see signs of good progress of diversification in the USA market IMO.
100% agree. We have seen what happens when all the eggs are in one basket. Whilst shoring up China would be great, IMO USA should be the key to growth.
Quote from: Minimoke on Jan 09, 2024, 08:41 AMI rate Forr Bar as next to useless when it comes to any kind of analysis. They have had too many significant fails for me to value their opinions.
I disagree that A2m is unlikely to purchase Dunsandel.
Firstly I see Synlait as being a significantly distressed company. With limited options to repay pay bankers and virtually no options to repay bond holders. Synlait need to sell dairy works to repay bankers. They need to sell dunsandel to repay bondholders.
Given Dunsandel is more than likely going to end up fro sale. Who could buy? A2M have an ever increasing war chest of cash that they simply seem to consistently refuse to apply to any overseas opportunities. For years they have said "We can put our cash to better use than shareholders - via a dividend" but have failed to buy anything other than Matuara. So surely they must have been keeping their tinder dry until Dunsandel became as cheap as chips. Which it is now.
Bright Dairy I suspect will stand aside. Its not about bright dairy (or state farms) - its about centralised chinese government feeding its population and keeping their elites happy.
And then there are synergies that can be brought into play with Mataura. Have one NZ head of Manufacturing looking after both Dunsandel and Mataura. One, integrated computer system, one set of farm producer standards. Bring in cost efficiencies and create more competition for Fonterra but not west gold milk.
Excellent post and I completely agree.
What do you mean in that last sentence about west gold milk? Why would it not effect them?
Quote from: Mr Slothbear on Jan 14, 2024, 10:31 PMExcellent post and I completely agree.
What do you mean in that last sentence about west gold milk? Why would it not effect them?
Westland Milk. (When you drive through the coast you see signs saying "entering gold milk country."
We shouldn't forget Westland Milk were near collapse in 2019. Government was even considering a tax payer bailout because they couldn't afford to see a major industry on the West Coast go under. West land had debt of $342m - approx 60% of the company value. Rune that measure against Synlait!
But the Chineses (Yili) stepped in and offered way over the odds. Initial valuations put Westland at $0.88 - $1.38 a share. Yili paid $3.41 ma share of $588m.
So They Chinese have no qualms about paying over the odds to secure NZ food supply. But they won't want to compete against Yili. By allowing Bright / State Farms (via A2M to give it the semblance of retained local ownership) China then only has Fonterra to compete with.
ATM on the leader board today......up 3.9% or 17c.....seems the decline in the latest Chinese birth rate decline figures are not as large as ATM were predicting...... plus news that A2 is now being marketed via Amazon in USA.
Quote from: Left Field on Jan 17, 2024, 08:36 PMATM on the leader board today......up 3.9% or 17c.....seems the decline in the latest Chinese birth rate decline figures are not as large as ATM were predicting...... plus news that A2 is now being marketed via Amazon in USA.
Up over 5% on ASX. The Amazon news is huge for breaking into the USA market
45 results when searching for A2 on Amazon
Quote from: Buzz on Jan 17, 2024, 08:49 PMUp over 5% on ASX. The Amazon news is huge for breaking into the USA market
Yes, but remember ... in the relationship between amazon and A2M is A2M only a powerless minnow without any lever to negotiate.
They used to sell A2 Platinum for something like NZD 50 in China. Now I see you can buy the tin at amazon for for USD 19.99 (i.e. NZD 32.75), and of that amazon will still take a nice bite.
I am wondering what this will do to their (well, A2M's) margins ... ?
Anyway - anything which stemms inflation must be good for the economy. Great A2M is doing this service for all of us ...
Quote from: Left Field on Jan 17, 2024, 08:36 PMATM on the leader board today......up 3.9% or 17c.....seems the decline in the latest Chinese birth rate decline figures are not as large as ATM were predicting...... plus news that A2 is now being marketed via Amazon in USA.
Its quite amazing to think that China's birth rate has halved since 2016. And 2023 is the second year where total population has fallen. Maybe they will soon be looking to import people rather than export them as they do now. All those girls going overseas to study won't be helping their fertility rate.
- China's population drops 0.15% y/y in 2023
- Birth rate at new low, death rate at highest since 1974
- Total new births drop 5.7% to 9.02 mln
- Total deaths rise 6.6% to 11.1 mln
Quote from: KW on Jan 18, 2024, 10:18 AMIts quite amazing to think that China's birth rate has halved since 2016. And 2023 is the second year where total population has fallen. Maybe they will soon be looking to import people rather than export them as they do now. All those girls going overseas to study won't be helping their fertility rate.
- China's population drops 0.15% y/y in 2023
- Birth rate at new low, death rate at highest since 1974
- Total new births drop 5.7% to 9.02 mln
- Total deaths rise 6.6% to 11.1 mln
China, being China, I suspect will start enforcing an increase in birth rate. They are far forward looking enough to know that things won't pan out well in 60 years time with a large aged population with few young ones to support it.
Quote from: Minimoke on Jan 18, 2024, 10:24 AMChina, being China, I suspect will start enforcing an increase in birth rate. They are far forward looking enough to know that things won't pan out well in 60 years time with a large aged population with few young ones to support it.
I suspect they managed to demonstrate already that they are not forward thinking. Their female population in reproductive age is already ways to small to turn the trend and keeps rapidly decreasing, and Chinese women have anyway very little reasons to get married and to get children. They are all from the princess generation ... too selfish to look after children, and on top of that is there little or no social security for a woman in China who does look after children instead of having a job. Ongoing sexism on the job creates additional hurdles for women with gaps in their careers.
Demographic:
https://en.wikipedia.org/wiki/Demographics_of_China
Jeez - I see fertility in China is currently at 1.08 children per woman ... and they would need 2.1 to keep the population at least constant (i.e. they would need to double fertility to stay still). Their sex ratio at birth does not help either - 111 boys to 100 girls. I am wondering how this will help them to increase the future birthrate ... maybe they order in future men to carry the babies?
I guess at least they can act as deterring example to the rest of us and demonstrate how not to manage the big coming population decline which all countries will see over the coming 50 years.
Remember - peak population for the globe is around 2050 ... thanks to Africa still growing. The rest of the world is declining - just not as fast as China is.
As KW would say - time to invest in funeral homes instead of baby milk.
Anyway - too late for the empire of the middle - they screwed it up in the 1970'ies with their one child policy. Not a lot they can do now to fix their mistakes 2 generations later. A ways too small cohort of women and most of them already too old to reproduce does not augur well for population development.
Quote from: BlackPeter on Jan 18, 2024, 11:11 AMI suspect they managed to demonstrate already that they are not forward thinking. Their female population in reproductive age is already ways to small to turn the trend and keeps rapidly decreasing, and Chinese women have anyway very little reasons to get married and to get children. They are all from the princess generation ... too selfish to look after children, and on top of that is there little or no social security for a woman in China who does look after children instead of having a job. Ongoing sexism on the job creates additional hurdles for women with gaps in their careers.
Demographic:
https://en.wikipedia.org/wiki/Demographics_of_China
Jeez - I see fertility in China is currently at 1.08 children per woman ... and they would need 2.1 to keep the population at least constant (i.e. they would need to double fertility to stay still). Their sex ratio at birth does not help either - 111 boys to 100 girls. I am wondering how this will help them to increase the future birthrate ... maybe they order in future men to carry the babies?
I guess at least they can act as deterring example to the rest of us and demonstrate how not to manage the big coming population decline which all countries will see over the coming 50 years.
Remember - peak population for the globe is around 2050 ... thanks to Africa still growing. The rest of the world is declining - just not as fast as China is.
As KW would say - time to invest in funeral homes instead of baby milk.
Anyway - too late for the empire of the middle - they screwed it up in the 1970'ies with their one child policy. Not a lot they can do now to fix their mistakes 2 generations later. A ways too small cohort of women and most of them already too old to reproduce does not augur well for population development.
Its China. Get married, have babies or miss out on things.
Time to invest in foods for an aging population.
Quote from: Minimoke on Jan 18, 2024, 11:37 AMIts China. Get married, have babies or miss out on things.
Time to invest in foods for an aging population.
I guess the data disagree with your statement. Time for an alternative reality?
Quote from: BlackPeter on Jan 18, 2024, 11:43 AMI guess the data disagree with your statement. Time for an alternative reality?
The data is backward looking. I'm talking about future demographic policy.
Quote from: BlackPeter on Jan 18, 2024, 10:06 AMYes, but remember ... in the relationship between amazon and A2M is A2M only a powerless minnow without any lever to negotiate.
They used to sell A2 Platinum for something like NZD 50 in China. Now I see you can buy the tin at amazon for for USD 19.99 (i.e. NZD 32.75), and of that amazon will still take a nice bite.
I am wondering what this will do to their (well, A2M's) margins ... ?
Anyway - anything which stemms inflation must be good for the economy. Great A2M is doing this service for all of us ...
If A2M is a powerless minnow, what you will say about other 99% of sellers on Amazon then? I'm not sure if you know but Amazon is a market place where pretty much anyone can sell their stuff without need of special relationship with them. Yes, Amazon get their commissions but this is how it works.
If you are wondering about A2M's margins you might want to compare products of similar sizes at least. Comparing price of 900g tin to 400g tin won't help. A hint for you 900g tin on Amazon priced at US$39.99 (NZ$65.51). So, you might need to check your math again.
Btw, a2 platinum on Amazon is not really a news those who follow the company know it was available there for at least couple of months.
Quote from: KW on Jan 18, 2024, 10:18 AMIts quite amazing to think that China's birth rate has halved since 2016. And 2023 is the second year where total population has fallen. Maybe they will soon be looking to import people rather than export them as they do now. All those girls going overseas to study won't be helping their fertility rate.
- China's population drops 0.15% y/y in 2023
- Birth rate at new low, death rate at highest since 1974
- Total new births drop 5.7% to 9.02 mln
- Total deaths rise 6.6% to 11.1 mln
Yep, I've heard that almost all girls left China now. That is why boys have to marrying holograms. They have so many holograms now it helped to increase their marriage statistics. The only question I have will those hologram's babies need infant formula? ::)
It surprises me how people in NZ hate their home grown businesses, always trying to undermine and devalue them. Only to realize the loss when some offshore entity come and buy it out for pennies.
Quote from: CG on Jan 18, 2024, 12:10 PMYep, I've heard that almost all girls left China now. That is why boys have to marrying holograms. They have so many holograms now it helped to increase their marriage statistics. The only question I have will those hologram's babies need infant formula? ::)
Currently 60% of Chinese international students are female. I'll bet that the more the CCP tries to pressure them into marrying and having babies (eg. by wielding the social credit regime against them if they dont) the more that they will flee to other countries, either under the guise of studying, or by simply getting an overseas work visa.
Quote from: KW on Jan 18, 2024, 12:58 PMCurrently 60% of Chinese international students are female. I'll bet that the more the CCP tries to pressure them into marrying and having babies (eg. by wielding the social credit regime against them if they dont) the more that they will flee to other countries, either under the guise of studying, or by simply getting an overseas work visa.
You think as a truly western person. The thing is it's quite far from reality. I don't want to generalize, but over the years I met quite a few Chinese people here in NZ, most of them came here because they wanted to have bigger family (it was before China removed one child policy) and pretty much all of them had at least 2 children. Saying that these people had and maintained very strong connections to their families back in China. Some of them as far as I know now moved their families back to homeland.
Quote from: CG on Jan 18, 2024, 11:55 AM...
A hint for you 900g tin on Amazon priced at US$39.99 (NZ$65.51). So, you might need to check your math again.
Fair enough ... I didn't realise that Synlait is now filling two different sizes of tins. Not sure this is an improvement, though. Last time I visited their line in Dunsandel they hardly managed to cope with one tin size. Maybe this (adding complexity to their production line) is the reason they had so many production problems over the last year as ATM claims?
But I guess, if they kill these margins internally it must be ok ...?
Quote from: CG on Jan 18, 2024, 05:48 PM...
It surprises me how people in NZ hate their home grown businesses, always trying to undermine and devalue them. Only to realize the loss when some offshore entity come and buy it out for pennies.
Your language gives you away. Holder who did fall in love with their holding? Legitimate criticism has nothing to do with hate ...
NZ grown? Maybe. But I assume you realise that ATM as well as many of its holdings do have deep Chinese connections? Obviously - nothing wrong with that, it is just, that their interests are for some time not any longer aligned with the interests of NZ retail investors. Given as well that A2M (with a strong Chinese cornerstone shareholder) and SML (in practical terms majority controlled by China - City of Shanghai holds more than 40% and A2M (with Chinese influences) makes up the balance to over 50%) seem to try to destroy each other in the public forum (or at least performing an amazing show fight) makes one wonder who is hating whom.
I assume the A2M Chinese and the SML Chinese don't hate each other, which makes me wonder why A2M and SML perform this amazing value destructing spectacle. Clearly not in the interest of any retail share holder, isn't it?
No matter how NZ retail shareholders feel about any of these companies, they might be better off to keep away while the dragons wrestle ... too difficult to make money if the boards interests are clearly not aligned with the interests of the retail shareholders.
Quote from: CG on Jan 18, 2024, 05:48 PMYou think as a truly western person. The thing is it's quite far from reality. I don't want to generalize, but over the years I met quite a few Chinese people here in NZ, most of them came here because they wanted to have bigger family (it was before China removed one child policy) and pretty much all of them had at least 2 children. Saying that these people had and maintained very strong connections to their families back in China. Some of them as far as I know now moved their families back to homeland.
There will always be people who want a big family, but there are now more people who don't want any children. The birth rate has more than halved in China since 2016 despite being allowed (and encouraged) to have 3 children. Attitudes have shifted, its not 2016 any more, and the ones that are in NZ with large families are clearly not representative of China as a whole. Once they might have shifted countries to have more children, now they might shift countries to avoid having children.
Asian countries have the worst fertility rates in the world. Look at Japan. Taiwan, Singapore, Hong Kong, and Macau. South Korea now has a fertility rate of 0.7. I'd say this is actually more of an Asian thing than it is a western thing.
https://www.statista.com/statistics/268083/countries-with-the-lowest-fertility-rates/
https://time.com/6488894/south-korea-low-fertility-rate-trend-decline/
Quote from: BlackPeter on Jan 19, 2024, 10:03 AMYour language gives you away. Holder who did fall in love with their holding? Legitimate criticism has nothing to do with hate ...
NZ grown? Maybe. But I assume you realise that ATM as well as many of its holdings do have deep Chinese connections? Obviously - nothing wrong with that, it is just, that their interests are for some time not any longer aligned with the interests of NZ retail investors. Given as well that A2M (with a strong Chinese cornerstone shareholder) and SML (in practical terms majority controlled by China - City of Shanghai holds more than 40% and A2M (with Chinese influences) makes up the balance to over 50%) seem to try to destroy each other in the public forum (or at least performing an amazing show fight) makes one wonder who is hating whom.
I assume the A2M Chinese and the SML Chinese don't hate each other, which makes me wonder why A2M and SML perform this amazing value destructing spectacle. Clearly not in the interest of any retail share holder, isn't it?
No matter how NZ retail shareholders feel about any of these companies, they might be better off to keep away while the dragons wrestle ... too difficult to make money if the boards interests are clearly not aligned with the interests of the retail shareholders.
Oh, no! My cover is blown, my true and secret love is uncovered. What should I do, what should I do? I guess I'll tell you a bit more of my secrets, I would marry my holding if I could like those Chinese boys marry girls holograms. I would marry it because it made me so much money that I was able to afford early retirement and now can enjoy comfortable life with multiple overseas travels every year. And yes, I still have sizable holding. I invested in this company early because I saw huge potential and it's sill the case. So, instead of buying into conspiracy theories about Chinese influence and some other crap by some "legitimate" critics who is trying to figure out how margin was squeezed by comparing products of different sizes and even have no idea what kind of products company is offering, I follow and learn about the business. Are they perfect - no, company did and does have issues, but not that bs people mainly talking about. And yes, I visited Dunsandel and Pokeno factories.
Btw, it's not Synlait's decision on what size tins they should fill, it's up to A2M. If A2M will tell them to fill 3kg they will fill 3kg. If Synlait unable to do so, it's not A2M's problem and they will find someone who will. Just shows one more time your limited knowledge of A2M business.
In fact I'm in love with all my current 16 holdings, ah, no, cancel that, only 14, 2 were naughty recently, because every year they bring me ever increasing dividends. If I didn't love them I wouldn't buy them.
Quote from: CG on Jan 19, 2024, 03:15 PMOh, no! My cover is blown, my true and secret love is uncovered. What should I do, what should I do? I guess I'll tell you a bit more of my secrets, I would marry my holding if I could like those Chinese boys marry girls holograms. I would marry it because it made me so much money that I was able to afford early retirement and now can enjoy comfortable life with multiple overseas travels every year. And yes, I still have sizable holding. I invested in this company early because I saw huge potential and it's sill the case. So, instead of buying into conspiracy theories about Chinese influence and some other crap by some "legitimate" critics who is trying to figure out how margin was squeezed by comparing products of different sizes and even have no idea what kind of products company is offering, I follow and learn about the business. Are they perfect - no, company did and does have issues, but not that bs people mainly talking about. And yes, I visited Dunsandel and Pokeno factories.
Btw, it's not Synlait's decision on what size tins they should fill, it's up to A2M. If A2M will tell them to fill 3kg they will fill 3kg. If Synlait unable to do so, it's not A2M's problem and they will find someone who will. Just shows one more time your limited knowledge of A2M business.
In fact I'm in love with all my current 16 holdings, ah, no, cancel that, only 14, 2 were naughty recently, because every year they bring me ever increasing dividends. If I didn't love them I wouldn't buy them.
Hmm, sounds like you are either privvy to an amazing amount of Insider information - or you are quite misinformed.
I used to follow SML quite closely (until they hired Leon, who gave me a great reason to sell the shares still at their peak :). I remember a discussion with their former CFO (Nigel Greenwood) who confirmed at that stage that SML owns the IP for A2 Platinum, owns the export licences to China and fully controls the manufacturing process.
Sure - I don't follow them anymore very close since I sold out, and maybe they gave their rights away. I can't see however why SML would do that, and looking at the current dogs breakfeast in company relations it sounds, that A2 has a quite different view of what they are allowed to do with A2 Platinum, than Synlait has. Clearly, they just need a genius like you to sort that out instead of relying on expensive lawyers.
So, why don't you just stop the current artbitration process between the companies (hey, they are wasting your shareholder funds) and tell both ATM as well as SML off for being stupid to fight about some confidential agreements when the answers are absolutely obvious to you.
You could save them millions :P ;
Discl: used to hold both (ages ago), holding currently none. 2 hot 4 me ;) ;
Quote from: BlackPeter on Jan 19, 2024, 05:36 PMHmm, sounds like you are either privvy to an amazing amount of Insider information - or you are quite misinformed.
I used to follow SML quite closely (until they hired Leon, who gave me a great reason to sell the shares still at their peak :). I remember a discussion with their former CFO (Nigel Greenwood) who confirmed at that stage that SML owns the IP for A2 Platinum, owns the export licences to China and fully controls the manufacturing process.
Sure - I don't follow them anymore very close since I sold out, and maybe they gave their rights away. I can't see however why SML would do that, and looking at the current dogs breakfeast in company relations it sounds, that A2 has a quite different view of what they are allowed to do with A2 Platinum, than Synlait has. Clearly, they just need a genius like you to sort that out instead of relying on expensive lawyers.
So, why don't you just stop the current artbitration process between the companies (hey, they are wasting your shareholder funds) and tell both ATM as well as SML off for being stupid to fight about some confidential agreements when the answers are absolutely obvious to you.
You could save them millions :P ;
Discl: used to hold both (ages ago), holding currently none. 2 hot 4 me ;) ;
I'm not sure what exactly I'm misinformed about, but it seems someone here has a problem to separate two businesses.
Nobody is arguing that Synlait holds SAMR and fully controls the manufacturing process at their facilities. It might hold some IPs to manufacturing process for this particular IF as well. But it
does not have any rights to finished products and it's manufacturing these products to specifications A2M gave them. I'm not sure why is it so hard to understand. Have you ever heard term "outsource manufacturing"? Take Apple for example. Apple does not manufacture its products, Foxconn and some other companies do for them. That Foxconn might have some IPs and knowhows to the manufacturing process, but it produces iphones and other stuff to exact Apple's specifications, assemble, packed them, ship to Apple, get paid for its service and has absolutely no rights to the finished product. Same or rather say similar relations exist between A2M and Synlait.
Yes, it seems like you still have no clue about what that "exclusive rights" arbitration is about. Will try one more time. When A2M and Synlait signed their agreement in return for A2M being "Synlait's preferred customer, with committed production capacity and access to new technologies, and continued favourable and competitive pricing terms", A2M gave Synlait "exclusive supply rights up to a specified IF product volume and a right of first offer for certain additional volumes, in both cases in respect of the IF stages 1-3 already supplied by Synlait and for sale by the a2MC group in the markets of China, Australia and New Zealand". In simple words in exchange for lower price A2M promised that a2 Platinum stage 1-3 they sell in China and ANZ will be manufactured by Synlait and nobody else. Now A2M trying to get rid of this "exclusive supply rights" clause because while it's in force A2M can't legally sell a2 Platinum manufactured by others (MVM for instance) in China and ANZ. They can in Vietnam or US for example, but at this point of time and probably in the nearest future they do not have volume to justify full scale production on another site, plus they want to diversify their supply options which makes perfect sense. So, to load other manufacture with needed volume A2M need shift at least part of production from Synlait, but it's not possible while "exclusive supply rights" agreement in place. Why they went into arbitration. To get rid of this clause A2M was arguing that Synlait did not maintain DIFOT performance which is a part of the "exclusive supply rights" agreement. Obviously Synlait disputes that. They did have 20-business day to resolve this peacefully but were unable to. Therefor went to arbitration, which will decide if A2M has rights to cancel that "exclusive supply rights" agreement. I'm a bit puzzled with why do you think that I or somebody else can stop or resolve that arbitration?
PS. I'm not a genius but some say I have good analytical skills
CG, your analysis of the current situation between Synlait and ATM is spot on. Discl. No longer a shareholder of either company for quite some time, but so much to learn about management practices between these two companies.
Quote from: CG on Jan 19, 2024, 07:47 PMI'm not sure what exactly I'm misinformed about, but it seems someone here has a problem to separate two businesses.
Nobody is arguing that Synlait holds SAMR and fully controls the manufacturing process at their facilities. It might hold some IPs to manufacturing process for this particular IF as well. But it does not have any rights to finished products and it's manufacturing these products to specifications A2M gave them. I'm not sure why is it so hard to understand. Have you ever heard term "outsource manufacturing"? Take Apple for example. Apple does not manufacture its products, Foxconn and some other companies do for them. That Foxconn might have some IPs and knowhows to the manufacturing process, but it produces iphones and other stuff to exact Apple's specifications, assemble, packed them, ship to Apple, get paid for its service and has absolutely no rights to the finished product. Same or rather say similar relations exist between A2M and Synlait.
Yes, it seems like you still have no clue about what that "exclusive rights" arbitration is about. Will try one more time. When A2M and Synlait signed their agreement in return for A2M being "Synlait's preferred customer, with committed production capacity and access to new technologies, and continued favourable and competitive pricing terms", A2M gave Synlait "exclusive supply rights up to a specified IF product volume and a right of first offer for certain additional volumes, in both cases in respect of the IF stages 1-3 already supplied by Synlait and for sale by the a2MC group in the markets of China, Australia and New Zealand". In simple words in exchange for lower price A2M promised that a2 Platinum stage 1-3 they sell in China and ANZ will be manufactured by Synlait and nobody else. Now A2M trying to get rid of this "exclusive supply rights" clause because while it's in force A2M can't legally sell a2 Platinum manufactured by others (MVM for instance) in China and ANZ. They can in Vietnam or US for example, but at this point of time and probably in the nearest future they do not have volume to justify full scale production on another site, plus they want to diversify their supply options which makes perfect sense. So, to load other manufacture with needed volume A2M need shift at least part of production from Synlait, but it's not possible while "exclusive supply rights" agreement in place. Why they went into arbitration. To get rid of this clause A2M was arguing that Synlait did not maintain DIFOT performance which is a part of the "exclusive supply rights" agreement. Obviously Synlait disputes that. They did have 20-business day to resolve this peacefully but were unable to. Therefor went to arbitration, which will decide if A2M has rights to cancel that "exclusive supply rights" agreement. I'm a bit puzzled with why do you think that I or somebody else can stop or resolve that arbitration?
PS. I'm not a genius but some say I have good analytical skills
Look, no idea whether your analysis is good, but so far you didn't show us that it isn't build in sand.
You make a lot of assumptions about A2M's rights to A2 Platinum, which are inconsistent to what Synlaits senior management used to tell.
Question is - are these just fact-free allegations - or can you prove them?
Synlait owns the supply side - because all the A2 farmers have contracts with Synlait, not with A2M
Synlait does not own "some"IP, it owns (at least did own, and I am not aware this changed) the IP to A2 Platinum - which is basically the recipee for the infant formula. Without owning the recipee A2M is not allowed to get anybody else to produce this product. If you don't understand what I mean, try to copy the recipee of Coca Cola without them agreeing and try to sell the product under their name .. and you soon will know.
Synlait and A2M obviously have a confidential contract about the supply of A2 Platinum to A2M. Typically these contacts can only be changed if both sides agree - i.e. your claim SML needs to delvier in whatever portions A2M asks them to bogus.
So - I suggest you provide some evidence for your claims ... e.g. a copy of the contract or a link to an announcement that Synlait gave up their rights - otherwise - your whole analysis is just based on fact free assumptions (or your desires as A2M share holder - hey, wouldn't it be nice ...). Not worth the time to discuss.
Based on this has A2M from a legal perspective a rather weak hand ... which might explain why it basically appears to run Synlait into the ground by undermining its ability to refund their debts (Synlait needs to find over the next couple of months a handful of 100 million dollars otherwise it will go bust).
Amazing spectacle between two basically Chinese controlled companies. Just wondering, Einstein, given that you claim plenty of insider knowledge - what reason do you see for A2M to destroy the value of their corner stone holding in Synlait? Is this just the attempt of a takeover on the cheap - or is this two Chinese groups running a pi**ing contest?
Anyway - I guess my point was just that A2M is a high risk investment. Sure - some traders with insider knowledge could make tons of money, but we've seen as well plenty of investors destroying their nestegg. Have a look into the other forum and check who was all defening A2M on the way down from $20 to $ 5. Ouch ...
I hope investors know what they are doing - too much misery so far in this stock, and the future looks like its controlled by lots of hidden agendas and the courts.
Good luck!
Quote from: BlackPeter on Jan 20, 2024, 12:52 PMLook, no idea whether your analysis is good, but so far you didn't show us that it isn't build in sand.
You make a lot of assumptions about A2M's rights to A2 Platinum, which are inconsistent to what Synlaits senior management used to tell.
Question is - are these just fact-free allegations - or can you prove them?
Synlait owns the supply side - because all the A2 farmers have contracts with Synlait, not with A2M
Synlait does not own "some"IP, it owns (at least did own, and I am not aware this changed) the IP to A2 Platinum - which is basically the recipee for the infant formula. Without owning the recipee A2M is not allowed to get anybody else to produce this product. If you don't understand what I mean, try to copy the recipee of Coca Cola without them agreeing and try to sell the product under their name .. and you soon will know.
Synlait and A2M obviously have a confidential contract about the supply of A2 Platinum to A2M. Typically these contacts can only be changed if both sides agree - i.e. your claim SML needs to delvier in whatever portions A2M asks them to bogus.
So - I suggest you provide some evidence for your claims ... e.g. a copy of the contract or a link to an announcement that Synlait gave up their rights - otherwise - your whole analysis is just based on fact free assumptions (or your desires as A2M share holder - hey, wouldn't it be nice ...). Not worth the time to discuss.
Based on this has A2M from a legal perspective a rather weak hand ... which might explain why it basically appears to run Synlait into the ground by undermining its ability to refund their debts (Synlait needs to find over the next couple of months a handful of 100 million dollars otherwise it will go bust).
Amazing spectacle between two basically Chinese controlled companies. Just wondering, Einstein, given that you claim plenty of insider knowledge - what reason do you see for A2M to destroy the value of their corner stone holding in Synlait? Is this just the attempt of a takeover on the cheap - or is this two Chinese groups running a pi**ing contest?
Anyway - I guess my point was just that A2M is a high risk investment. Sure - some traders with insider knowledge could make tons of money, but we've seen as well plenty of investors destroying their nestegg. Have a look into the other forum and check who was all defening A2M on the way down from $20 to $ 5. Ouch ...
I hope investors know what they are doing - too much misery so far in this stock, and the future looks like its controlled by lots of hidden agendas and the courts.
Good luck!
In my younger years one professor taught me - never argue with intellectually disadvantaged people. So, whatever pal.
Quote from: CG on Jan 20, 2024, 01:46 PMIn my younger years one professor taught me - never argue with intellectually disadvantaged people. So, whatever pal.
That's funny - but the real irony is that it appears your don't seem to have grasped why your professor tried to teach you this lesson :P ;
CG & BlackPeter,
There is much for us all to learn from the exchange of ideas, information, thoughts and assessments from one another - be them right or wrong.
It needs proper interaction and whilst I may not be the best person to commend it, could I suggest that we all try?
Best of the week to us all.
Cheers!
"Will the year of the dragon pay off for A2 Milk?"
JENNY RUTH'S JUST THE BUSINESS this morning.
She's not convinced by their US moves and questions the birth rate data coming out of China. As always, worth the read.
Quote from: Hectorplains on Jan 30, 2024, 10:18 AM"Will the year of the dragon pay off for A2 Milk?"
JENNY RUTH'S JUST THE BUSINESS this morning.
She's not convinced by their US moves and questions the birth rate data coming out of China. As always, worth the read.
A good read, and I too am not convinced by their US moves.
However she did not mention the main driver behind the huge surge in ATM share price to ~$21, which happened when the Chinese mothers of new babies did not trust local suppliers of IF following the melamine scandal where contaminated IF killed some babies. ATM happened to be in a very trusted position in the market at the time, became Chinese IF of choice and took full advantage.
I don't see this position repeating, not since the Chinese authorities took steps to ensure all IF suppliers would be strictly regulated. The ATM marketing message to US consumers needs to be a lot stronger if they are banking on the US market to lift their share price.
From that Jenny article this broker not convinced .....bit mean calling A2 a tragic commodity stock
Broking firm Blackbull is among those sceptics: "We're not convinced by China's birth rate numbers and were happy to get out of a tragic commodity stock while the price was a little high (the A2 milk protein reminds us of magic beans)."
Quote from: Whome on Jan 30, 2024, 10:52 AMA good read, and I too am not convinced by their US moves.
However she did not mention the main driver behind the huge surge in ATM share price to ~$21, which happened when the Chinese mothers of new babies did not trust local suppliers of IF following the melamine scandal where contaminated IF killed some babies. ATM happened to be in a very trusted position in the market at the time, became Chinese IF of choice and took full advantage.
I don't see this position repeating, not since the Chinese authorities took steps to ensure all IF suppliers would be strictly regulated. The ATM marketing message to US consumers needs to be a lot stronger if they are banking on the US market to lift their share price.
That's a good point about the melamine tragedy...A2 undoubtedly benefited from that ill wind. As to the US, Stats NZ (https://www.stats.govt.nz/information-releases/overseas-merchandise-trade-december-2023/) December export data shows no IF shipments to the US. I reckon it's safe to extrapolate that if they aren't sending it, it's because they're not selling it.
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/
Forward PE FY24 22, FY25 18.
Add me to the sceptic's camp. Low growth commodity player.
Well said Whome.
Quote from: Hectorplains on Jan 30, 2024, 10:18 AM"Will the year of the dragon pay off for A2 Milk?"
JENNY RUTH'S JUST THE BUSINESS this morning.
She's not convinced by their US moves and questions the birth rate data coming out of China. As always, worth the read.
Jenny Ruth, yeah right.
Amazon top 100:
https://www.amazon.com/Best-Sellers-Baby-Baby-Toddler-Formula/zgbs/baby-products/16323121/ref=zg_bs_pg_2_baby-products?_encoding=UTF8&pg=2
89th and 90th, but only just launched and early days. Behind both Bellamys and Bubs products.
Market seems to be anticipating a positive announcement on the 19 Feb. SP up to 5.16
Quote from: Minimoke on Jan 30, 2024, 02:23 PMMarket seems to be anticipating a positive announcement on the 19 Feb. SP up to 5.16
Still over $2.50 to match what it was a year ago and nothing much has changed since then.
Synalit today gives a shocker market up date. One interesting point - no update of Dairyworks sale.
But they say "The Board and Management are actively working on the need to deleverage Synlait's balance sheet as a priority. Synlait will provide an update when it releases its HY24 result in March."
Given no one seems interested in buying Dairyowrks, what else can Synlait sell?.
Dunsandell seems a likely asset. A2 has piles of cash and would need to be interested.
Don't think they would be interested in Pokeno
Good result. Increased market share in China plus useful progress on numerous fronts. Topping the leader board today. Up nearly 9%.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/426363/412760.pdf
1. Delivered a positive interim result with 3.7% revenue growth and 5.0% EBITDA2 growth
2. Grew total IMF sales despite a double-digit decline in the China infant milk formula (IMF) market
3. Achieved top-5 China IMF position with brand health reaching new highs supported by record levels of marketing
4. Launched new GB registered China label IMF product successfully with transition ahead of plan
5. Stabilised English label IMF sales on 2H23 after several periods of decline with new products on the way
6. Improved revenue growth guidance for FY24 relative to prior outlook statement
Financial results and outlook
• Revenue growth of 3.7% to $812.1 million
- Regional revenue: China & Other Asia segment up 16.5%, ANZ down 24.1% due to a change in distribution strategy,
USA up 8.6% and MVM down 4.7%
- Category revenue: Total IMF up 1.5% with China label up 10.4% and English label down 6.9%5
, liquid milk in ANZ
and USA up 1.5% and 7.0% respectively, other nutritionals6 up 48.5% and ingredients (MVM) down 4.7%
• EBITDA up 5.0% to $113.2 million with an EBITDA margin of 13.9% (up 0.2ppts)
• Net profit after tax (NPAT) attributable to owners of the Company up 15.6% to $85.3 million7
• Basic earnings per share (EPS) up 18.6% to 11.8 cents
• Closing net cash8 of $792.1 million up $34.9 million on June 2023 with operational cash conversion of 86.8%9
• FY24 revenue growth guidance increased from low, to low-to-mid single-digit percent on prior year. EBITDA margin
expected to be broadly in line with FY23 (see FY24 Outlook in the "1H24 Results Commentary and Outlook"
announcement)
• Medium-term revenue ambition timing modified to reflect market conditions (see Medium-term revenue ambition
update in the "1H24 Results Commentary and Outlook" announcement)
Well positioned.
Well - SML made the mistake of not mitigating their one trick pony strategy (solely relying on ATM) - and look where they are now.
Interesting to read in todays update from A2M, that they follow the same strategy:
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/426363/412760.pdf
David said: "We continued to execute against our growth strategy, primarily focused on the China market which now represents approximately 80% of our total branded sales"
80% of his eggs in one basket - WOW. If this basket drops or breaks, than there will be a lot of spilled eggs ...
But hey, their biggest market is just run by an autocrat preparing for the next war and running a system where the only law is what said autocrat wishes to do to stay in power ... what could possibly go wrong with this investment?
ATM is a long way from being a "one trick pony". Clearly A2's cunning plan is to play to its China strengths whilst is expands its markets elsewhere and gears up production in Australia, MVM and possibly SML.
• Accelerated sales growth of other nutritional products, up 48.5%, utilising A1 protein free milk powders produced by MVM
• Continued to develop a2 Milk® Lactose Free market penetration and progressed major upgrade of Kyabram processing facility in Victoria with Kyvalley Dairy Group
• Improved profitability of USA business, commenced distribution of a2 Platinum® IMF under US Food and Drug Administration (FDA) Enforcement Discretion with selected retailers in-store and online, and progressed long-term FDA IMF approval with clinical trial underway
Whether you think A2 is investable or not, the fact remains even with the upbeat earnings result, it is still overvalued. Sitting on a P/E of 28 and paying no dividend. Compare that to other companies you can buy on the stock market, like STP.ASX which is on a P/E of 26 and pays a 4% dividend and is growing Revenue at 25% and EBITDA at 35% and has a gross margin of 81%
The share price needs to reflect A2's lower margins and low growth earnings. Its not the high growth high flier it used to be, more of a plodder now, trying to eke out market share gains in a shrinking market.
Quote from: KW on Feb 20, 2024, 02:03 PMWhether you think A2 is investable or not, the fact remains even with the upbeat earnings result, it is still overvalued. Sitting on a P/E of 28 and paying no dividend. Compare that to other companies you can buy on the stock market, like STP.ASX which is on a P/E of 26 and pays a 4% dividend and is growing Revenue at 25% and EBITDA at 35% and has a gross margin of 81%
The share price needs to reflect A2's lower margins and low growth earnings. Its not the high growth high flier it used to be, more of a plodder now, trying to eke out market share gains in a shrinking market.
What i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.
One advantage of having cash in the bank .....but it wasn't used to grow the business profusely per se. ...... essentially no profit growth if interest income excluded ...as KW says just a plodder
Quote from: winner (n) on Feb 20, 2024, 03:17 PMWhat i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.
One advantage of having cash in the bank .....but it wasn't used to grow the business profusely per se. ...... essentially no profit growth if interest income excluded ...as KW says just a plodder
Nice pick up Winner. I havent seen that mentioned in the writeups.
Quote from: KW on Feb 20, 2024, 03:47 PMNice pick up Winner. I havent seen that mentioned in the writeups.
Old news, a lot of us knew this yesterday morning, huge war chest of cash is much better than those high flying forever loss making tech companies.
Quote from: winner (n) on Feb 20, 2024, 03:17 PMWhat i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.
One advantage of having cash in the bank .....but it wasn't used to grow the business profusely per se. ...... essentially no profit growth if interest income excluded ...as KW says just a plodder
Could you support your statement with numbers from the report please?
Quote from: KW on Feb 20, 2024, 02:03 PMWhether you think A2 is investable or not, the fact remains even with the upbeat earnings result, it is still overvalued. Sitting on a P/E of 28 and paying no dividend. Compare that to other companies you can buy on the stock market, like STP.ASX which is on a P/E of 26 and pays a 4% dividend and is growing Revenue at 25% and EBITDA at 35% and has a gross margin of 81%
The share price needs to reflect A2's lower margins and low growth earnings. Its not the high growth high flier it used to be, more of a plodder now, trying to eke out market share gains in a shrinking market.
What is the total shareholder return since float for this wonderful STP.ASX company? How much profit did they make in the previous couple of years? How much dividends paid? If I'm not mistaken their latest profit is few times less then A2M's interest income, is it right?
Quote from: winner (n) on Feb 20, 2024, 03:17 PMWhat i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.
Interesting Winner..... Just had time to read through their presentation. ATM doing well on many fronts.
Net sales increase of $29 mill ( ie on total net sales $811 Mill) v Interest income of $16.5 Mill? ) Refer page 22 of their presentation.
Anyways a risk free.... freehold.... hold for me.
Quote from: CG on Feb 20, 2024, 10:33 PMWhat is the total shareholder return since float for this wonderful STP.ASX company? How much profit did they make in the previous couple of years? How much dividends paid? If I'm not mistaken their latest profit is few times less then A2M's interest income, is it right?
How is any of that relevant? The past is the past. You invest today because you think the share price is going to go up in the future. Which company is more likely to triple its share price in the next 5 years? Hint. Its not A2.
Quote from: KW on Feb 21, 2024, 10:24 AMHow is any of that relevant? The past is the past. You invest today because you think the share price is going to go up in the future. Which company is more likely to triple its share price in the next 5 years? Hint. Its not A2.
It's relevant as much as comparing small underwear business to big dairy company. Yes, it's much harder to triple $1.6b sales than $90m. But some past performance might help to see a trend of the future. Past and future in it together. Btw, didn't you say something similar about BUB's chances to outperform and triple in the future? How is that going?
Quote from: CG on Feb 21, 2024, 10:50 AMIt's relevant as much as comparing small underwear business to big dairy company. Yes, it's much harder to triple $1.6b sales than $90m. But some past performance might help to see a trend of the future. Past and future in it together. Btw, didn't you say something similar about BUB's chances to outperform and triple in the future? How is that going?
I no longer own BUB so I dont really care. I'm here to make money, not to be right. I dont hang around in underperforming stocks because they once used to be good companies. As they say "when the facts change, I change my mind. What do you do?"
Up 54% from Nov'23 lows, golden cross 22/2, flirting with 61.8% Fib retrace to Feb'23 high. https://invst.ly/13n9bq
Of course it depends on birth rates. I have attached a report which suggests a turnaround is imminent. The Executive Summary is set out below and the full report is attached.
Executive Summary
The convergence of the end of Covid 19 lockdowns, the rapid expansion of hukou eligibility, the introduction of a raft of policies to make child bearing more economic for Chinese families, and the end of birth deferral will absolutely lead to a reversal in the decline in the birth rate.
Leaving aside the impact of applying universally the registration of all children born out of wedlock and the provision of urban Hukou status to migrant families (which will be significant), the increase in birth registrations resulting from the ending of birth deferral over the next 5 to 7 years will result in an additional 4 million births per annum, or a 50% increase on current levels.
There is a very real economic burden imposed by hukou refusals. Withdrawal of these refusals provides significant incentives for previously disadvantaged groups to have children. The reversal of the birth rate and numbers decline could well be dramatic. The question is not if, it's when.
The analysis shows that each year a significant proportion of births are "shadow births" and are not revealed in either the official statistics or market research analysis.
The data also shows that over 50% of births occur in rural locations and in Tier 3 and 4 cities where market research companies like Kantar and Smart Path operate very infrequently. Moreover the parents of many of the children born in these contexts do not have access to online channels. Whether, and to what extent, their children consume infant formula and what brands remains a mystery.
This report shows there is much that is unknown about the consumption habits of a significant portion of Chinese births and that it is completely false and wrong to claim "double digit declines" and "steep declines'' in the infant formula market based on statistics which this report shows are highly inaccurate, under-enumerated, and exclude a very large portion of the potential infant formula market.
Mimimoke
Hi you might remember me Blackeyed. I have attached a file on Chinese Birth Rates which I have authored. I give ypu permission to copy it and post on Hotcopper Australia. Its all sourced and footnoted. Could you convert from Word to PDF before posting as my PDF file is too big to post here.
Quote from: blackeyed on Feb 25, 2024, 08:28 PMMimimoke
Hi you might remember me Blackeyed. I have attached a file on Chinese Birth Rates which I have authored. I give ypu permission to copy it and post on Hotcopper Australia. Its all sourced and footnoted. Could you convert from Word to PDF before posting as my PDF file is too big to post here.
Thanks
That's an interesting read. Sorry not sure how to post large documents on HC. Best I can usually do is post an image.
I wonder how many families that have not had their kids registered for Hukou are IF consumers.
Mimimoke
Its not a large document as far as bytes go and it can be posted.I believe the information is vital in that it exposes the fragile notion of the big shorts and that is to use falling published birth rates (which are wrong) to bash A2's share price. Kind regards
Quote from: blackeyed on Feb 27, 2024, 11:22 AMMimimoke
Its not a large document as far as bytes go and it can be posted.I believe the information is vital in that it exposes the fragile notion of the big shorts and that is to use falling published birth rates (which are wrong) to bash A2's share price. Kind regards
Done. (I havent posted a doc before - had to figure out it prefers PDF format) Not attributed so let me know if you want it attributed.
Thanks Mimi I owe you one. The subtext of this is that if you notice the CEO of A2 is always claiming the market in China is in steep decline when its not and when he can't prove it to make mediocre performance look great. But its not and his renumeration hurdles this year were set really low and lead to the major sharemarket decline, so he got his bonuses and we got rubbish. Now if you see the latest results from Danone, they grew revenue by 10% in IF and stated they had an extremely strong quarter with the results considerably better than David B's first half. Its time to put pressure on for tougher and higher targets and to ignore the narrative he has created. Ask him to prove that the figures he are quoting and are for all channels. He can't.
@blackeyed, I think you need to out yourself on this forum. Johnathan, you got banned from Hotcopper quite a while ago, for continuously abusing detractors and even promoters of A2M/ATM that didn't appear to you to support your hypothesis, sometimes awful knee jerk reactions that even when pointed out that you got the wrong end of the stick, you would never bring yourself to apologise or withdraw.
Now you suck in Minimoke to post your article on Hotcopper, because you can't. Johnathan, you should at the very least include in your article, attribution to the author (yourself apparently) and disclose your credentials to be making this analysis and drawing these conclusions and your authenticity and credibility. An anonymous article has absolutely zero credibility, which would be an ignominious outcome for all the hard work you clearly have put in to researching and writing it.
This forum is a nice place, but it is a back-water in the scheme of forums and your audience here is minute, most of whom though actually think ATM is a dog stock, for which they have given their reasoning. So far it looks like you've snuck in the door because the Admin doesn't know your history elsewhere and my advice to you and them, is to desist from manipulating other members here to do your work, and don't ever revert to your awful persona that got you banned from Hotcopper.
Quote from: Buzz on Feb 27, 2024, 08:00 PM@blackeyed, I think you need to out yourself on this forum. Johnathan, you got banned from Hotcopper quite a while ago, for continuously abusing detractors and even promoters of A2M/ATM that didn't appear to you to support your hypothesis, sometimes awful knee jerk reactions that even when pointed out that you got the wrong end of the stick, you would never bring yourself to apologise or withdraw.
Now you suck in Minimoke to post your article on Hotcopper, because you can't. Johnathan, you should at the very least include in your article, attribution to the author (yourself apparently) and disclose your credentials to be making this analysis and drawing these conclusions and your authenticity and credibility. An anonymous article has absolutely zero credibility, which would be an ignominious outcome for all the hard work you clearly have put in to researching and writing it.
This forum is a nice place, but it is a back-water in the scheme of forums and your audience here is minute, most of whom though actually think ATM is a dog stock, for which they have given their reasoning. So far it looks like you've snuck in the door because the Admin doesn't know your history elsewhere and my advice to you and them, is to desist from manipulating other members here to do your work, and don't ever revert to your awful persona that got you banned from Hotcopper.
just to be clear i dont mind posting the article.
Like any written piece (like in financial journals and broker reports) its entirely up to the reader to make what they want of the written word.
Perhaps it adds to a persons total body of knowledge. Or not..
One thing is for sure. You cant believe Annual Reports when they say they are holding back cash for M&A activity. And dont. And dont even spend it on divies or buy backs.
Quote from: blackeyed on Feb 27, 2024, 07:07 PMThanks Mimi I owe you one. The subtext of this is that if you notice the CEO of A2 is always claiming the market in China is in steep decline when its not and when he can't prove it to make mediocre performance look great. But its not and his renumeration hurdles this year were set really low and lead to the major sharemarket decline, so he got his bonuses and we got rubbish. Now if you see the latest results from Danone, they grew revenue by 10% in IF and stated they had an extremely strong quarter with the results considerably better than David B's first half. Its time to put pressure on for tougher and higher targets and to ignore the narrative he has created. Ask him to prove that the figures he are quoting and are for all channels. He can't.
Fair enough, but when comparing ATM with Danone, you should consider that Danone is operating world wide in basically all major markets and selling basically all things milk, while ATM has in reality only one cash cow (China Infant formula), and that poor animal is losing fat quite rapidly.
So, yes - ATM is clearly designed to always fatten its board and senior staff, but it might not be quite fair to compare them to a worldwide operating milk giant. ATM choose to put all of its eggs into one basket (something some punters here advocate for as well - and shareholders did benefit from this strategy while things were good. Now they pay for it. There is no free lunch - I'd say - fair enough (but hey, I am not holding).
Interesting article from Keith Woodford at Interst.co
https://www.interest.co.nz/rural-news/126699/keith-woodford-provides-update-a2-milk-noting-good-science-always-wins-out-long
In there is a link to his latest research paper which concludes "Specific strategies for reducing exposure to bBCM7 and GD7 are two-fold. Bovine BCM7 is relatively easy to remove from the food-system by producing cows that produce A2 rather than A1 beta-casein or alternatively placing more emphasis on milks from other species such as sheep and goats, plus an emphasis on human milk for babies."
Good update, thanks for posting Mini.
Yes, good update, thanks Mini.
The uptrend continues, close $6.51 today, up 62.5% from the recent low. All key short term TA resistance broken, golden cross, super-golden (100/200ema) imminent, 61.8% FIB retrace from the previous high. Next resistance above $6.68 (minor) then $7.83 the previous high. That's another 20% upside from here, if it happens. Shorts (A2M) peaked in Feb, dropped off a bit but still elevated at 6.17%. Looks good backed by solid fundamentals, huge cash pile, no debt, growing market share, revenue and profit.
We should find out early April with the SML announce, whether ATM is part of the recovery for them. Specific mention by the CEO of "acquisitions" in the post ATM release conference call, may point to SML. Or some part in it.
Couldn't find a Fonterra thread so post it here.... their interim report is impressive.
https://www.nzx.com/announcements/428329
Maybe this result will influence ATM SP?
Quote from: Left Field on Mar 21, 2024, 08:42 AMCouldn't find a Fonterra thread so post it here.... their interim report is impressive.
https://www.nzx.com/announcements/428329
Maybe this result will influence ATM SP?
Also relevant to Synlait. Fonterra increase profits 20%. Synlait???
Quote from: Minimoke on Mar 21, 2024, 08:50 AMAlso relevant to Synlait. Fonterra increase profits 20%. Synlait???
SML have signaled their result, with a $17-21m loss.
More interested in their results for other reasons!! ;D
A2 have a bit of a track record of making market announcement about its relationship with Synlait. I find it interesting they are silent today after Synlaits trading halt announcement. And that they didn't get a mention in that announcement.
Market (including now the ASX has opened) seems unconcerned with SP holding broadly steady at $6.69
NBR's Tim Hunter writes:
"A2 Milk's passive-aggressive play for Synlait
ANALYSIS: The infant formula marketer looks in a strong position to achieve ownership of the Dunsandel processing plant, holder of its prized China licence."
The article is behind a paywall, but food for thought.
Probably right......ATM 'well positioned.'
Quote from: Left Field on Apr 13, 2024, 08:10 AMNBR's Tim Hunter writes:
"A2 Milk's passive-aggressive play for Synlait
ANALYSIS: The infant formula marketer looks in a strong position to achieve ownership of the Dunsandel processing plant, holder of its prized China licence."
The article is behind a paywall, but food for thought.
Probably right......ATM 'well positioned.'
Thanks, but don't have access to NBR. What was the rationale that leads them to say "in a strong position"?
Quote from: Buzz on Apr 13, 2024, 08:34 AMThanks, but don't have access to NBR. What was the rationale that leads them to say "in a strong position"?
Basically buying Dunsandel plant which is the licensed manufacturer for A2 Milk's China formula secures supply for 60% of A2's sales
Quote from: winner (n) on Apr 13, 2024, 09:06 AMBasically buying Dunsandel plant which is the licensed manufacturer for A2 Milk's China formula secures supply for 60% of A2's sales
What? They are buying the plant, or might be buying the plant? What reasons do they give for whatever they're saying? Thanks.
Quote from: Buzz on Apr 13, 2024, 09:18 AMWhat? They are buying the plant, or might be buying the plant? What reasons do they give for whatever they're saying? Thanks.
Buzz I too haven't read the article ...... however it doesn't take a rocket scientist to figure out the theory.
The following article (which you can read) by Prof Woodward outlines a similar scenario to what I guess the NBR article is saying.
https://www.interest.co.nz/rural-news/127103/keith-woodford-says-synlait-cannot-survive-without-major-asset-sales-plus-major
"My judgment is that Synlait has no long-term future without the unconstrained loyalty of its farmer-suppliers. I doubt whether that loyalty is now recoverable as long as Synlait is limping along. Synlait will certainly not regain that loyalty if there is any risk going forward of being constrained in any way by lack of capital.
This means that whoever comes into the Synlait business has to bring in enough cash via new shares to pay off the vast majority of the debt, and to satisfy farmers that it is there for the long-term.
By my reckoning, that is an issue that only Bright or a2Milk can solve, either singly or together. Otherwise, it is going to be a slow trainwreck."
Quote from: Buzz on Apr 13, 2024, 09:18 AMWhat? They are buying the plant, or might be buying the plant? What reasons do they give for whatever they're saying? Thanks.
Here's the reasoning snippet from the article
Its distress is evident in its market capitalisation – this week just $133m.
However, having invested $286m in Synlait for a stake now worth a mere tenth of that, A2 Milk has been scrupulously silent on whether it will tip more money in.
If it doesn't – and the general understanding is it won't – it leaves a big hole in any attempted equity raise by Synlait.
The fact that no capital raise has occurred so far, despite the obvious need for many months, speaks volumes. The inference must be that A2 Milk is deliberately staying aloof, or should that be aloft, until Synlait's choicest cuts are left exposed.
It's probably no coincidence that A2 Milk has sought to cancel the exclusivity element of its contract in a dispute with Synlait – a move that scarcely contributes to the confidence of the milk processor's other stakeholders.
Interesting development as Fonterra puts its consumer brands such as Anchor up for sale....
https://www.nzx.com/announcements/431158
On top of the above Fonterra announcement, this latest article from Keith Woodward on the gradual shift to A2 is interesting.
https://www.interest.co.nz/rural-news/127749/keith-woodford-reveals-rather-remarkable-transition-underway-where-a2-beta-casein?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+15+May+2024
Quote from: Left Field on May 16, 2024, 08:38 AMInteresting development as Fonterra puts its consumer brands such as Anchor up for sale....
https://www.nzx.com/announcements/431158
I'm not sure what to make of this. Is fonterra just going to turn into a commodity marketer?
Its clear things are afoot in the dairy industry. Which reminds me. I wonder how that arbitration process with Synlait is going. Its been 7 months now.
Quote from: Minimoke on May 16, 2024, 02:02 PMI'm not sure what to make of this. Is fonterra just going to turn into a commodity marketer?
Its clear things are afoot in the dairy industry. Which reminds me. I wonder how that arbitration process with Synlait is going. Its been 7 months now.
Agree.... I'm guessing Fonterra is planning to revert to a B2B strategy supplying other brands such as Nestle etc..... seems a retrograde step to me. Maybe those juicy retail margins aren't all they seem to be.
Big risk of becoming a price taker, not a price maker. (B2B didn't seem to work well for SML?)
It's going to be interesting to see who becomes the purchaser and sees value in the brands.
So what's the plan, ditch the brands then shift to A2-only production, then launch new brands/work with A2M to take over the world, funding studies showing the dangers of A1 milk as they go?
Or do we just become the world's largest price taker on undifferentiated milk powder?
Quote from: mfd on May 16, 2024, 02:52 PMSo what's the plan, ditch the brands then shift to A2-only production, then launch new brands/work with A2M to take over the world, funding studies showing the dangers of A1 milk as they go?
Or do we just become the world's largest price taker on undifferentiated milk powder?
Whatever the plan market seems to like it. First time in ages there been a 5% rise in a day.
Quote from: Minimoke on May 16, 2024, 05:10 PMWhatever the plan market seems to like it. First time in ages there been a 5% rise in a day.
Interesting TA resistance broken as well, the .786 FIB. Currently up almost 80% since the lows in Nov'23. ATM a star performer so far this year. https://invst.ly/14vq9m
A2M charging ahead. At this rate its going to get a speeding ticket.
Quote from: Minimoke on May 17, 2024, 04:19 PMA2M charging ahead. At this rate its going to get a speeding ticket.
Whatever is behind this..... I'm loving it! Nudging $8.00
Market seems to be backing ATM v SML
Quote from: Left Field on May 27, 2024, 05:32 PMWhatever is behind this..... I'm loving it! Nudging $8.00
Market seems to be backing ATM v SML
Hopefully it is a sustainable increase and not another pump and dump
Quote from: Left Field on May 27, 2024, 05:32 PMWhatever is behind this..... I'm loving it! Nudging $8.00
Market seems to be backing ATM v SML
TA shows an important close at $7.93 today above the double top high of $7.83 from 21/2/23. Interesting the NZX opened lower today than yesterday's close (uncertainty), but the ASX powered up from the open and NZX quickly followed and caught up. Indicators are well over bought though and even in the heady run-up days to +$20, and same in the recent run-up, it never spent more than two weeks overbought, we're past week one now. I'd anticipate anything could happen now, but assuming the breakout holds for a few more days, a modest run-up from here, possibly even to the next resistance $8.90-$9.10, or somewhere before then, a retrace to around here to test the breakout support. Right now it's 98% up from the Nov'23 lows. Quite the turnaround but will it stick!
Quote from: Buzz on May 27, 2024, 09:20 PM............Quite the turnaround but will it stick!
Indeed that is the question.
So no news since 19 Feb and SP stayed reasonably flat. Then no news for 2 months until mid April, stil on no news SP has risen 30%. What do insiders know? Could crack $8.00 this week if momentum continues.
a2m.png
Quote from: Left Field on May 27, 2024, 09:32 PMIndeed that is the question.
...... and the answer is that the SP hasn't held its recent trend... (at least according to the today's 5 day chart.)
Glad I didn't make any predictions and looking forward to the next market update
Chinese Premier is in town. Says we are welcome to send more infant formula
Quote from: Left Field on May 29, 2024, 06:21 PM...... and the answer is that the SP hasn't held its recent trend... (at least according to the today's 5 day chart.)
Glad I didn't make any predictions and looking forward to the next market update
Who knows why it fell so sharply that day, today was a different story and i bet no one knows why that was either :o
Quote from: Minimoke on Jun 13, 2024, 09:07 PMChinese Premier is in town. Says we are welcome to send more infant formula
Do you have a quote on that? Something we can rely on?
Quote from: Buzz on Jun 13, 2024, 09:17 PMDo you have a quote on that? Something we can rely on?
Here you go: "Memorandum of Arrangement on Infant Formula Cooperation"
https://english.news.cn/20240613/926cb02f59184723b4d132a66d98345c/c.html
and
"Mr Hoggard says an important part of the new arrangement is supporting audits of New Zealand infant formula manufacturing premises.
"The new cooperation arrangement will enable the Ministry for Primary Industries (MPI) to assist Chinese authorities with audits of New Zealand infant formula manufacturers," Mr Hoggard says.
"This is a strong demonstration of the trust and confidence China has in New Zealand's infant formula and food safety systems."
https://www.scoop.co.nz/stories/PA2406/S00084/government-boosts-agriculture-and-food-trade-with-china.htm
Quote from: Minimoke on Jun 14, 2024, 07:15 AMHere you go: "Memorandum of Arrangement on Infant Formula Cooperation"
https://english.news.cn/20240613/926cb02f59184723b4d132a66d98345c/c.html
and
"Mr Hoggard says an important part of the new arrangement is supporting audits of New Zealand infant formula manufacturing premises.
"The new cooperation arrangement will enable the Ministry for Primary Industries (MPI) to assist Chinese authorities with audits of New Zealand infant formula manufacturers," Mr Hoggard says.
"This is a strong demonstration of the trust and confidence China has in New Zealand's infant formula and food safety systems."
https://www.scoop.co.nz/stories/PA2406/S00084/government-boosts-agriculture-and-food-trade-with-china.htm
Unless that is weaponised against NZ manufacturers and is designed to ensure that Synlait's manufacturing plants end up in the hands of Bright Dairy for peanuts.
ATM on the leader board today (in marked contrast to SML.)
Naaaice. ;)
Meanwhile another food scandal in China shows why foreign brands are preferred....
https://edition.cnn.com/2024/07/10/food/china-oil-food-safety-scandal-sinograin-intl-hnk/index.html
Silence from governement on proposed IF blank tin labelling. Could be a worry
Quote from: Minimoke on Jul 25, 2024, 05:56 PMSilence from governement on proposed IF blank tin labelling. Could be a worry
Explain please, context.
Quote from: Buzz on Jul 25, 2024, 06:12 PMExplain please, context.
Prob to do with this
https://www.thepost.co.nz/business/350346831/food-giant-warns-441-jobs-and-1b-exports-risk-infant-formula-labelling-plan
Quote from: Minimoke on Jul 25, 2024, 05:56 PMSilence from governement on proposed IF blank tin labelling. Could be a worry
Actually, government is quite clear on that proposal - "'No way': Finance Minister Willis opposed to proposed changes for infant formula laws"
https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/nicola-willis-finance-minister-voices-disapproval-with-proposed-changes-to-infant-formula-laws/#:~:text=2024%2C%206%3A53pm-,The%20Government%20is%20strongly%20opposing%20proposed%20changes%20to%20infant%20formula,formula%20regulation%20%2D%20including%20labelling%20laws.
Quote from: CG on Jul 25, 2024, 07:02 PMActually, government is quite clear on that proposal - "'No way': Finance Minister Willis opposed to proposed changes for infant formula laws"
https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/nicola-willis-finance-minister-voices-disapproval-with-proposed-changes-to-infant-formula-laws/#:~:text=2024%2C%206%3A53pm-,The%20Government%20is%20strongly%20opposing%20proposed%20changes%20to%20infant%20formula,formula%20regulation%20%2D%20including%20labelling%20laws.
in which case there was zero need for yesterdays meeting. Nz shelves maybe ok. Perhaps not so Australian.
Ozzzies seem set on treating IF like cigarettes.
Quote from: CG on Jul 25, 2024, 07:02 PMActually, government is quite clear on that proposal - "'No way': Finance Minister Willis opposed to proposed changes for infant formula laws"
https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/nicola-willis-finance-minister-voices-disapproval-with-proposed-changes-to-infant-formula-laws/#:~:text=2024%2C%206%3A53pm-,The%20Government%20is%20strongly%20opposing%20proposed%20changes%20to%20infant%20formula,formula%20regulation%20%2D%20including%20labelling%20laws.
An update
"The Infant Nutrition Council (INC) welcomes the announcement today from the trans-Tasman Food Ministers meeting in Adelaide that New Zealand has rejected proposals for infant formula label changes"
https://www.scoop.co.nz/stories/BU2407/S00441/infant-nutrition-council-welcomes-the-nz-ministers-decision-on-infant-formula-labelling.htm
That's a very telling statement from NZ Infant nutrition council..... well done them.
A2 opened today at $7.68. 159,700 shares just changed hands at $7.915. Some one is keen.
Now trading at close to 12 month high
Edit. Now $7.98 - = equal to 12 month high.
Edit. $8.00. new 12 month high. with 250,000 shares in a trade crossing
Quote from: Left Field on Jun 25, 2024, 12:20 PMIn the ATM v SML match I'm picking ATM......
I've added to my holding today.
Posted this on the SML thread awhile ago.....Nice to have the support of today's purchaser!
Quote from: Minimoke on Jul 30, 2024, 12:19 PMA2 opened today at $7.68. 159,700 shares just changed hands at $7.915. Some one is keen.
Now trading at close to 12 month high
Edit. Now $7.98 - = equal to 12 month high.
Edit. $8.00. new 12 month high.
Eons away from $21, at $8 id still be down 7 figures if I still had my original sized holding, perspective aye.
@leftfield.
A2 and Synlait tended to track along the same lines. Until last December
a2m.png
Hmm ... still working on understanding the human psyche - and admittedly, sometimes it feels like I am not getting closer :) ;
Anyway - looking at A2M:
It is these days a pretty boring milk company without any material IP. Anybody is allowed to sell A2 milk, whether it is healthier or not. Right?
Their major market (China IF) is going backwards (lack of money and babies) and their other big market (US) still sounds like a pipedream ... and if it ever makes money, there is nothing I can see stopping competitors to eat their lunch.
Their business is not anymore easily scalable. It used to be in the good old times they just sold marketing, but these days they have to invest into lots of stainless steel to ramp up production - as anybody else. Forget about cheap and easy growth ...
Which means, ATM should be priced like any other agricultural business - say PE between 8 (that's cheap) and (maybe) 12 (which would be borderline expensive and give still an IP or growth bonus they don't deserve).
However - at todays SP their forward PE (3 years) would be 28 (at a forward earnings CAGR of 5) and their backwards PE (10 years) would be 37. Sure - amazon used to trade at similar PE's (and worse), but this is not amazon. amazon is easily scalable and did grow like hell, but ATM - its just a boring milk company.
What makes people pay these stellar PE's for ATM? Based on which working assumptions of the fundamentals would the current share price for A2M be good value?
Or is this really just an example for an application of the greater fool theory?
Quote from: BlackPeter on Jul 30, 2024, 01:12 PMHmm ... still working on understanding the human psyche - and admittedly, sometimes it feels like I am not getting closer :) ;
Anyway - looking at A2M:
It is these days a pretty boring milk company without any material IP. Anybody is allowed to sell A2 milk, whether it is healthier or not. Right?
Yes - but you have to source a1 protein milk form somewhere. It take a while to convert herds from a1 to a1 free cows.
Quote from: BlackPeter on Jul 30, 2024, 01:12 PMTheir major market (China IF) is going backwards (lack of money and babies) and their other big market (US) still sounds like a pipedream ... and if it ever makes money, there is nothing I can see stopping competitors to eat their lunch.
Chinese baby numbers have bottomed out. Numbers are increasing. the door to Infant Formula powder into the US is open -
Quote from: BlackPeter on Jul 30, 2024, 01:12 PMTheir business is not anymore easily scalable. It used to be in the good old times they just sold marketing, but these days they have to invest into lots of stainless steel to ramp up production - as anybody else. Forget about cheap and easy growth ...
They arent yet really into stainless steel. Depite having nearly $1b in cash in the bank they havnt been out shopping for stainless steel in any meaning full way. Synliat is a prime opportunity - but appears not to have been taken up
Quote from: BlackPeter on Jul 30, 2024, 01:12 PMWhich means, ATM should be priced like any other agricultural business - say PE between 8 (that's cheap) and (maybe) 12 (which would be borderline expensive and give still an IP or growth bonus they don't deserve).
However - at todays SP their forward PE (3 years) would be 28 (at a forward earnings CAGR of 5) and their backwards PE (10 years) would be 37. Sure - amazon used to trade at similar PE's (and worse), but this is not amazon. amazon is easily scalable and did grow like hell, but ATM - its just a boring milk company.
What makes people pay these stellar PE's for ATM? Based on which working assumptions of the fundamentals would the current share price for A2M be good value?
Or is this really just an example for an application of the greater fool theory?
Year end was 30 June. Maybe someone has had a peak at year end accounts and seen that growth is in fact greater than anticipated. With more products coming out.
Quote from: BlackPeter on Jul 30, 2024, 01:12 PMOr is this really just an example for an application of the greater fool theory?
Even as a trade, the lessor fools have missed out on 100% increase in SP since the bottom in Nov'23. I doubt that the 'traders' give a toss about PE's, FA, or anything other than appreciating share price.
;)
Quote from: Minimoke on Jul 30, 2024, 01:20 PMYes - but you have to source a1 protein milk form somewhere. It take a while to convert herds from a1 to a1 free cows.
Well, yes - it takes 5 to 6 years, but many farmers started already a decade ago (and are there ...). I hear its pretty hard these days to get A1 sperm (in case anybody would insist to) ...
Quote from: Minimoke on Jul 30, 2024, 01:20 PMChinese baby numbers have bottomed out. Numbers are increasing.
That's not what the official data are saying, are you sure about that? I guess I hear that the Chinese government is pretty desperate to bring the numbers up, but so far Chinese women don't seem to comply ;p ):
Quote from: Minimoke on Jul 30, 2024, 01:20 PMThey arent yet really into stainless steel. Depite having nearly $1b in cash in the bank they havnt been out shopping for stainless steel in any meaning full way. Synliat is a prime opportunity - but appears not to have been taken up
Did you forget the Mataura Valley Milk factory in Southland? And they already own a meaningful stake in Synlait (even if they admittedly work hard on running them into the ground);
Quote from: Minimoke on Jul 30, 2024, 01:20 PMYear end was 30 June. Maybe someone has had a peak at year end accounts and seen that growth is in fact greater than anticipated. With more products coming out.
Buy on the rumour, sell on the news?
Who knows, but apart from potential earnings blips which may or may not eventuate - I am wondering which sort of fundamentals would justify even todays share price?
Quote from: Buzz on Jul 30, 2024, 01:39 PMEven as a trade, the lessor fools have missed out on 100% increase in SP since the bottom in Nov'23. I doubt that the 'traders' give a toss about PE's, FA, or anything other than appreciating share price.
;)
Fair enough - some people see the world as a big casino. And fair enough ... if it works for them.
Though the odds on that might be a bit scary - some win, some lose - though admittedly, one hears more often from the winners. I suppose its a bit like assuming everybody survived the last war, given that one only meets survivors after the war.
But yes, I think you helped me to understand. This is a game, and people just need to dance close enough to the exit (like last time). Some of them will get out in time, and the rest - who cares?
That's the problem with these scenarios ... for every winner there is somebody else who loses out. Its just not possible for everybody to leave the party while there is still money on the table.
BP perhaps there is no right or wrong to sharemarket investing.
No black or white.
Just shades of grey.
1000 investors have 1000 different opinions.
At the end of the day.....it's their differing returns that measure them.
Quote from: Left Field on Jul 31, 2024, 08:41 AMBP perhaps there is no right or wrong to sharemarket investing.
No black or white.
Just shades of grey.
1000 investors have 1000 different opinions.
At the end of the day.....it's their differing returns that measure them.
I am not judging, just observing.
In the investing game everybody can win, given that the pie is growing due to the fundamentals. Its like farmers growing crops on their respective patches.
In the trading game for every winner there will be a loser (zero sum game). Its like pirates stealing the loot of each other. Somebody wins, and somebody loses.
And sure - both farmers as well as pirates can get rich ... but pirates have a significantly higher chance to find an early death.
Just to bring this back to subject - while one can make money with investing (looking at fundamentals) as well as with momentum trading - the risks for traders to lose their loot are higher. And while I agree that this is just a personal preference ... I think talking about the risks is quite topical.
If you buy into a share which is fundamentally overvalued by the market, you know that at the end somebody will lose their money. That's a fact - and a risk for everybody playing the game, but sure - whether people decide to gamble, this is a personal preference.
Looked at this yesterday. FWIW Forward PE for FY25 at $7.99 is 29.8.
7 analysts average price target 1 year hence is $7.05 which suggests a spot fair value valuation of about $6.35 now noting its not a dividend payer.
Not my cup of tea on those metrics but each to their own and there's no denying the uptrend. Just be positioned close to the exit door if a new downtrend emerges, I reckon. Good luck to holders. https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/
Confirmation today NZ isnt going to bend over to the Anti-formula advocates.
Looks like Australia is still heading to white label though.
https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/andrew-hoggard-food-safety-minister-on-the-infant-formula-label-changes/
Quote from: Minimoke on Aug 05, 2024, 04:30 PMConfirmation today NZ isnt going to bend over to the Anti-formula advocates.
Looks like Australia is still heading to white label though.
https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/andrew-hoggard-food-safety-minister-on-the-infant-formula-label-changes/
WTF! Treating IF like tobacco.
Quote from: Teitei on Aug 05, 2024, 04:39 PMWTF! Treating IF like tobacco.
Essentially yes. And some kind of drug - have to go to the pharmacy for "added extras" formula.
Mark your diary Monday 19 August 2024. results day
Settlement agreed.
For me the outstandig point was
"a2MC owns the intellectual property rights for the Product Specifications of the IMF products and is free from any restrictions or obligations under the Nutritional Products Manufacturing and Supply Agreement (NPMSA) to source
any Products from any person including Synlait, third party suppliers or internally."
Disappointingly A2 are agreeing to take a part in the Cap Raise. I still reckon they should have bought out Dunsandle.
Seems Mataua may not be going to plans as quickly as they would like. A2 going to work with Synlait (not Matuara) on a new SAMR product)
A2 going to pay back pay of $24.75m. Which will be a lifeline to Synlait.
All subject to a successful equity raise.
A good win-win outcome IMO
Here's the full details.....
https://www.nzx.com/announcements/436290
Interesting to see progress on USA initiatives..
I'm happy to see ATM staying clear of a potential 'take-over' of SML and remaining relatively 'capital light'. This agreement endorses a viable future for both ATM and SML.
Had another read of the settlement statement.
While it is a win-win... and buyers entering SML yesterday in the 30c range are probably 'well positioned.'
The settlement also represents a huge win for a2, a2 ownership of all IP to all their IF products, minimum supply volumes guaranteed by Synlait, flexibility to produce IF at MVM and guaranteed slot for new China label product at Dunsandal Plus ability to terminate SML supply with 3yrs notice.
The $24 million payment includes money that was previously withheld by a2 so this money was probably already expensed as a liability.
As well as the above, participation in the cap raise allows a2 to double down on their previous 'investment' in SML while securing its supply lines for the foreseeable future.
Quote from: Left Field on Aug 17, 2024, 08:40 AMHad another read of the settlement statement.
While it is a win-win... and buyers entering SML yesterday in the 30c range are probably 'well positioned.'
The settlement also represents a huge win for a2, a2 ownership of all IP to all their IF products, minimum supply volumes guaranteed by Synlait, flexibility to produce IF at MVM and guaranteed slot for new China label product at Dunsandal Plus ability to terminate SML supply with 3yrs notice.
The $24 million payment includes money that was previously withheld by a2 so this money was probably already expensed as a liability.
As well as the above, participation in the cap raise allows a2 to double down on their previous 'investment' in SML while securing it's supply lines for the foreseeable future.
I guess this is exactly what win-win means. Both sides win.
A bit sad, though that this win-win was only necessary because brainless and selfish idiots on both sides started the war in the first place.
SML replaced by now the hapless leaders who started this dumb and for all sides damaging war. Not so sure whether A2M did the same thing?
Quote from: BlackPeter on Aug 17, 2024, 11:34 AM.....SML replaced by now the hapless leaders who started this dumb and for all sides damaging war. Not so sure whether A2M did the same thing?
Has A2 done the same thing? I'm not sure it needs to.
IMO Bortolussi has made the right moves in initiating the SML dispute to clarify ownership of a2.s IP etc. Under current leadership a2 has made impressive market share gains in China and is setting up a2 for future expansion in other countries incl USA and an expanded range of products (not so IF reliant.)
This 'agreement/settlement' is also indicative of reasonable a2 leadership.
I always liked a2's 'capital light' model. However IMO a2's acquisition of MVM was a departure from 'capital light' and a potential SML takeover by a2 would have been and even bigger departure. This would have concerned me......particularly as IMO MVM is still not performing well for a2. I'm pleased this agreement shows a middle ground has been found for a2 in the interim.
Anyway.... just my ramblings FWIW.
ps a2 ASM and update 19 Aug.
And here it is folks......pretty healthy result at first glance
https://api.nzx.com/public/announcement/436310/attachment/424903/436310-424903.pdf
• Revenue growth of 5.2% to $1,675.5 million
- Regional revenue: China & Other Asia segment up 14.1%, ANZ segment down 14.6% due to a change in English label IMF distribution strategy, USA segment up 8.2% and MVM external sales down 11.0%
- Category revenue: Total IMF up 4.6% with China label up 9.5% and English label down 0.3%6
, liquid milk in ANZ and USA up 3.3% and 7.4% respectively, other nutritionals7 up 36.7%
• EBITDA up 6.9% to $234.3 million with an EBITDA margin of 14.0% (up 0.2ppts)
• Net profit after tax (NPAT) attributable to owners of the Company up 7.7% to $167.6 million8
• Basic earnings per share (EPS) up 9.2% to 23.2 cents
• Closing net cash9 of $968.9 million up $211.7 million on June 2023 with operational cash conversion of 125.7%10
• FY25 guidance for revenue growth of mid-single digit percent and EBITDA margin (% of revenue) to be broadly similar to FY24 (see FY25 Outlook in the "FY24 Results Commentary and Outlook" announcement)
The following also looks promising for future growth
Improved USA profitability significantly and commenced distribution of IMF with selected retailers in-store and online
under FDA Enforcement Discretion and progressed long-term IMF approval which is on-track for FY26 subject to FDA
approval
• Resolved Synlait arbitration disputes, including Synlait's acceptance of the validity of a2MC's notice of cancellation of
exclusivity, subject to Synlait completing its equity raise and the refinancing of its existing banking facilities. The Company
has agreed to support and subscribe for shares under Synlait's equity raise on terms to be agreed
• Progressed the Company's supply chain transformation by gaining access to a potential additional China label IMF
product registration slot with Synlait to be developed by December 2029 subject to SAMR approval. The Company
remains focused on securing further China label registrations and exploring other investment opportunities, mainly in
New Zealand and China
Presentation details; https://api.nzx.com/public/announcement/436310/attachment/424906/436310-424906.pdf
Sales up 5% and ebitda up up 7% a steady if not spectacular result
F25 guidance sales growth about the same with similar to F24 so expect another steady if not spectacular result again next year
That's how I see it
Looking at my notes they haven't really delivered on promises made over the last couple of years ......like margin improvement.
Pretty healthy but pretty much priced in id say, there are a few fish hooks here and there when you read the full report.
Quote from: winner (n) on Aug 19, 2024, 08:45 AMSales up 5% and ebitda up up 7% a steady if not spectacular result
F25 guidance sales growth about the same with similar to F24 so expect another steady if not spectacular result again next year
That's how I see it
Looking at my notes they haven't really delivered on promises made over the last couple of years ......like margin improvement.
2 bill target now extended to 2027, outlook still cautious.
Quote from: Breezy on Aug 19, 2024, 08:47 AM2 bill target now extended to 2027, outlook still cautious.
And EBITDA margin of high teens looks a bit optimistic to
But at least they make heaps
$970,000,000 in the bank. And still zero word of a dividend to long suffering shareholders. Other than perhaps there may be an announcement of a potential use of shareholder funds. I suppose at least impoverished kids are getting some of the cash.
I dont like it when they tell porkies to shareholders "The Company's capital allocation framework prioritises investment in growth initiatives ahead of returning capital to shareholders". Other than a bit of cash at Mataua they have done virtually nothing with allocating capital for years. Couldnt even make a go at Synlait when it was on its knees. The share buy back appears to have been an abject failure.
Very disappointing to see they are reporting on the nonsense that is Gender Pay Gap. But at least their efforts will target men to improve their lot. Basically only a few paragraphs - so i'll cut then some slack.
USA and Mataura expected to be profitable in 2027.
Operating profit up only $1m. Pathetic.
Profit for year up $9m. Pathetic (this includes $40m interest from having our cash in the bank)
Net assets up $107m. pathetic. Just goes to show they are pretty hopeless at managing capital. This number wouldn't be so rosy if they didnt have our cash in the bank
Gee. NZ market didnt like it. Down 9.44% open
Lets not forget they have committed to giving some of their cash to Synlait. Lets call that $70m out of their bank account.
Strip out the net interest income of $14.25m from the result and ATM's underlying result is hardly impressive - almost zero growth in earnings!
Strip out the cash of $900m from market cap and ATM is trading on a pretty ritzy multiple of 24 times for a stock with single digit earnings growth.
Cannot see the appeal of investing or owning this stock at current levels.
Just for a bit of context, after looking at todays SP fall, A2 is holding $1.34 a share in cash. Time for dividends!
Think this has been over sold. So bought a few more. No Not all of that 400,000 share trade was mine.
See David the CEO got remunerated A$6.0m ....with another A$1.0m of LTI earned to be paid in future
He not complaining about being low growth
Craig's say
The FY25 outlook is however disappointing, with mid-single digit revenue growth undershooting recent sales data – with ATM pointing to supply constraints in 1H25 – and flat margins implying FY25 EBITDA 11% below current consensus
Quote from: Shareguy on Aug 19, 2024, 12:57 PMCraig's say
The FY25 outlook is however disappointing, with mid-single digit revenue growth undershooting recent sales data – with ATM pointing to supply constraints in 1H25 – and flat margins implying FY25 EBITDA 11% below current consensus
How can there be supply constraints. Synlait is sitting on over $316m in inventory.
SML nearly up as much as A2 down, sibling rivalry.
Quote from: Minimoke on Aug 19, 2024, 01:07 PMHow can there be supply constraints. Synlait is sitting on over $316m in inventory.
Ever heard of wrong inventory mix?
Quote from: Breezy on Aug 19, 2024, 01:30 PMSML nearly up as much as A2 down, sibling rivalry.
Selling ATM to buy SML?
Quote from: Left Field on Aug 19, 2024, 01:47 PMSelling ATM to buy SML?
Was thinking the same at least punters on the NZX.
Quote from: Left Field on Aug 19, 2024, 08:35 AMAnd here it is folks......pretty healthy result at first glance
https://api.nzx.com/public/announcement/436310/attachment/424903/436310-424903.pdf
• Revenue growth of 5.2% to $1,675.5 million
- Regional revenue: China & Other Asia segment up 14.1%, ANZ segment down 14.6% due to a change in English label IMF distribution strategy, USA segment up 8.2% and MVM external sales down 11.0%
- Category revenue: Total IMF up 4.6% with China label up 9.5% and English label down 0.3%6
, liquid milk in ANZ and USA up 3.3% and 7.4% respectively, other nutritionals7 up 36.7%
• EBITDA up 6.9% to $234.3 million with an EBITDA margin of 14.0% (up 0.2ppts)
• Net profit after tax (NPAT) attributable to owners of the Company up 7.7% to $167.6 million8
• Basic earnings per share (EPS) up 9.2% to 23.2 cents
• Closing net cash9 of $968.9 million up $211.7 million on June 2023 with operational cash conversion of 125.7%10
• FY25 guidance for revenue growth of mid-single digit percent and EBITDA margin (% of revenue) to be broadly similar to FY24 (see FY25 Outlook in the "FY24 Results Commentary and Outlook" announcement)
The following also looks promising for future growth
Improved USA profitability significantly and commenced distribution of IMF with selected retailers in-store and online
under FDA Enforcement Discretion and progressed long-term IMF approval which is on-track for FY26 subject to FDA
approval
• Resolved Synlait arbitration disputes, including Synlait's acceptance of the validity of a2MC's notice of cancellation of
exclusivity, subject to Synlait completing its equity raise and the refinancing of its existing banking facilities. The Company
has agreed to support and subscribe for shares under Synlait's equity raise on terms to be agreed
• Progressed the Company's supply chain transformation by gaining access to a potential additional China label IMF
product registration slot with Synlait to be developed by December 2029 subject to SAMR approval. The Company
remains focused on securing further China label registrations and exploring other investment opportunities, mainly in
New Zealand and China
Presentation details; https://api.nzx.com/public/announcement/436310/attachment/424906/436310-424906.pdf
healthy result?
The "improvement" in the US market is just a reduction of their running loss. They pump for years money into it and still don't see a return (unless you consider a reduced loss a return).
Pretty dark clouds around the Chinese market - number of babies keep dropping (and even the smaller drop last year just temporary - they even mentioned in the report "longer term decline expected due to socio-demographic trends", which basically means that China does not have anymore enough women able (i.e. young enough) to carry babies to arrest the population decline.
The outlook statement (as well as the outlook) is highly unsatisfactory, except for investor who like risks and uncertainty, and even if we take the numbers at face value ...
forward PE (3 yrs) is 23 (after todays price correction), and this with an EPS forward CAGR of 4.5. Hmm - pretty stiff for an eternal "growth" company which always promised lots and delivered nothing. OK, there have been times when traders could make lots of money with them, but investors? And even for traders - it looks like they are price-ways again in the stratosphere.
Even if I ignore all the history of hyped up share prices and no shareholder returns at all. 23.2 cts EPS on a share price of $6.34 NZ is a PE of 27. Pretty stiff for a boring agricultural company pretending to be a growth company ... and the outlook is clearly not talking about increased revenues, but about plenty of risks for them to drop.
Ah yes, and than there is their legendary cash buffer. For every share they have $1.59 NTA (which includes all this amazing cash they never used). What a bargain - pay $6 (or wherever the SP drops) for the share to get $1.59 of assets.
Oh - dear, I better stop before the SP keeps falling and I need to redo my numbers above :) ... but here is the silver lining: No matter what the fundamentals, one can never predict to which heights or lows hype will move the share price.
Agree 100% BP. Forward metrics, even after the share price fall today look very demanding for a company with such modest growth this year and for the foreseeable future.
Quote from: Basil on Aug 19, 2024, 06:59 PMAgree 100% BP. Forward metrics, even after the share price fall today look very demanding for a company with such modest growth this year and for the foreseeable future.
And really a single product company too.
That was a blow to the SP, looks more like an attack on the limit sells by the machines. Now only 56% up from the Nov'23 low, that's quite a beating in one day! Overdone imo, market has a hissy fit (takes profits) and sets up a buy back, near 20% lower than Friday. Retail is not calling the shots on this one.
Quote from: Buzz on Aug 19, 2024, 08:09 PMThat was a blow to the SP, looks more like an attack on the limit sells by the machines. Now only 56% up from the Nov'23 low, that's quite a beating in one day! Overdone imo, market has a hissy fit (takes profits) and sets up a buy back, near 20% lower than Friday. Retail is not calling the shots on this one.
Pretty savage and yes retail have been a non event in this stock for years now, its all about machine manipulation by the Insto's.
Quote from: Buzz on Aug 19, 2024, 08:09 PMThat was a blow to the SP, looks more like an attack on the limit sells by the machines. Now only 56% up from the Nov'23 low, that's quite a beating in one day! Overdone imo, market has a hissy fit (takes profits) and sets up a buy back, near 20% lower than Friday. Retail is not calling the shots on this one.
Hardly a hissy fit when results came in lower than expectations and with a subdued outlook, especially when sp was primed for a very positive outlook.
Sp before result announcement went as high as $8.00 - that's a PER of 34.5 times (!!) so was trading on very high expectations.
At closing price of $6.27, still trading on a PER of 27 times!
Savage sp drop is what happens when any company disappoints the market.
Turnover of $93m on ASX certainly suggests massive down weighting by instos who bought in at lower levels.
For Bars review
The a2 Milk Company's (ATM) FY24 result provided little new information to change our view on the medium/long-term earnings outlook, but did affirm: (1) the solid market share growth, consistent with our data tracking (positively led by early stage products), and (2) the challenging market backdrop (competition and industry volumes), which will continue to be a headwind to margin expansion over the medium-term. The canary in the coal mine, where investors may feel uneasy following the FY24 result, is ATM calling out supply issues from its key supplier Synlait Milk (SML.NZ). FY25 EBITDA is set to be adversely impacted by at least -NZ$15m as a result, but more importantly it raises questions: (1) that similar issues could occur in the future, and (2) if it will impact new customer acquisition (the timing of which is particularly unfortunate, given CY24 births growth). At this stage we 'trust' that the issues will be isolated to 1H25. ATM's PE re-rate over recent months has now unwound, and it trades on ~24x PE (~22x ex cash), which we view as fair.
What's changed?
Earnings: FY25/FY26/FY27 EPS +0%/+2%/-2%.
Target price: Increased to NZ$6.55 reflecting: (1) roll-forward, (2) peers re-rate, (3) higher cash balance, and (4) slightly higher near-term earnings (our longer-term earnings are largely unchanged).
Transitory supply constraints?
ATM guided to FY25 revenue growth of mid-single digits (revenue of ~NZ$1.76bn) and EBITDA margins to be broadly similar to FY24 (14.0%), implying EBITDA of NZ$246m (-10% below prior consensus or -4% below our expectations). ATM stated growth will be affected by 'IMF supply constraints'. These issues are related to: (1) lower stock than planned at FY24 given strong 4Q24 sales, and (2) SML operational issues. We assume it is more the latter than the former, but there was a lack of detail from management. Without these issues, revenue growth could have been slightly higher, and costs at least NZ$10m less, given the extra air freight needed to offset the issues. Implying EBITDA guidance could have been NZ$260m–$265m, ~-4% below prior consensus. ATM is confident these issues should be isolated to 1H25, but evidence needs to be provided.
FY25 supply constraints took away from an otherwise solid result
FY24 revenue and EBITDA were in line with consensus expectations. Positively: (1) stage 1 market share growth was robust, a positive indicator for future sales, (2) market share gains in lower tier cities was solid, and (3) cash conversion was very strong, with net cash of ~NZ$930m. ATM reiterated that it continues to seek additional China Label registrations, with the potential for 'hundreds of millions' in capex. We are supportive of this strategy to gain registrations quickly, but think it will be a supporter, not a booster, to our market share growth forecasts, given the challenging competitive environment. It is also unlikely to be returns accretive.
Morningstar's view...... analysts all over the place with their forecasts..... (probably written by AI.)
A2 Milk Company's Moat Is Underpinned by Its Infant Formula Brand in China
Angus Hewitt
Aug 19, 2024
Business Strategy and Outlook
A2 Milk has built a brand that we expect to protect economic profits for years to come. China is the key battleground. A2's future growth relies heavily on further successful penetration of the Chinese infant formula market, which we estimate makes up the vast majority of earnings.
A2 is a licensor and marketer of fresh milk, infant formula, and other dairy products that lack the A1 beta-casein protein. Dairy cows naturally produce two beta-casein proteins in their milk: A1 and A2, which differ by one amino acid. A2 milk is produced by cows that naturally produce milk only containing the A2 protein; genetic testing is done to build herds of supply. Some studies have suggested the A1 protein may be associated with serious health issues, although a2 Milk only asserts that milk with only the A2 protein may positively affect digestive function.
Consumers have flocked to a2 Milk as a result of these perceived health benefits, helping to expand market share in Australian fresh milk, as well as infant formula in Australia and China following the launch of a2 Platinum in 2013. These gains have occurred alongside premium price points. In Australia, a2 Milk is typically more than double the price of private-label offerings, while a2 Platinum has higher pricing in Australia and China versus other leading brands.
Continued success in the Chinese-label business is crucial for a2. While the English-label business continues to recover, we think the Chinese-label business will more durably drive market share growth without the same reliance on resellers. Indeed, a2's marketing and distribution investment has shifted to focus on the Chinese label business. This appears to be reaping rewards with brand awareness and loyalty improving across the board, boding well for the long-term health of the a2 brand in China, which underpins the firm's narrow economic moat.
Bulls Say, Bears Say
Bulls
China remains a major long-term growth opportunity for a2 and should help to drive continued margin improvement.
While the science is currently uncertain, further studies on the benefits of A1-protein-free dairy products could support positive health claims for a2 Milk.
A2 generates solid free cash flow, which could be used to make accretive acquisitions or vertically integrate, or returned to shareholders.
Bears
A2 relies heavily on only two major suppliers, which risks price hikes, supply challenges, or future competition.
The company fights against strong competition in China and elsewhere. In the longer term, a2 may be undercapitalized to take on the marketing arms of dairy behemoths such as Nestle and Danone.
China could further alter the regulatory environment for infant formula, which may lead to supply disruptions for a2 or a greater ability for local manufacturers to compete.
Financial Strength
A2 is in solid financial shape. Apart from the NZD 38 million in debt as part of the 75% ownership in Mataura Valley Milk, a2 holds no debt and only minimal operating lease obligations on its balance sheet, and runs its business without need for major capital expenditures. With a net cash position of nearly NZD 1 billion (including Mataura Valley debt) at June 30, 2024 and limited working capital requirements, a2 can easily fund increased brand investment in China, capability buildout at Mataura Valley, and potential inorganic opportunities. Thus far, a2 has opted to not pay a dividend, but has indicated this as a potential future use of profits. We assume such a payment starting in fiscal 2027, at a 50% payout ratio of net profit after tax.
Economic Moat
With strong returns on invested capital, stemming from premium pricing and a capital-light business model, we assign a2 Milk a narrow economic moat based on its strong brand intangible assets.
A2 Milk enjoys solid brand positioning, particularly in the Chinese infant formula market and Australian fresh milk arena, which has led to premium pricing versus local and private-label alternatives. The company's products have become synonymous with the A1-protein-free dairy category, and have gained market share as the perceived health benefits of the offering have increased among its target consumer base. Infant formula market share in China increased to 3.4% in fiscal 2023 at retail, and around 21% through reseller channels, following the initial product launch in 2015. Similarly, A2 fresh milk has seen its share of the Australian market increase to more than 11%, from about 7% in fiscal 2013, suggesting low-double-digit compound annual growth in a market that has otherwise grown at about 3% per year, per GlobalData.
These gains have come despite a2's generally premium pricing, suggesting consumers are willing to pay up for the brand. In Australian fresh milk, a2 Milk is available for roughly double the price of the store-brand equivalent. This higher pricing extends to infant formula, as well. A2 Platinum generally runs about 50% higher in Australia versus other major players such as Nestle, Karicare, and Bellamy's. And in China, a2 is part of a growing consumer preference for premium, international brands instead of locally manufactured product, although the pricing premium is less pronounced versus major peers. A2 Platinum is priced near CNY 200 per tin (roughly AUD 39), in line with Danone's Aptamil, but trailing Nestle's Wyeth and Mead Johnson's (a unit of Reckitt Benckiser) Enfamil. Nonetheless, these market-leading formula products are all priced substantially higher than mainstream products such as Hero Baby (a Swiss company) and leading local manufacturers such as Yili.
A2 has continued to price at a premium even when entering new markets. This strategy extends to the US, where the company has recently expanded to about 22,300 stores nationwide, including Whole Foods, Sprouts, and Wegmans, and regionally with Costco and Walmart. While the company hasn't achieved break-even profitability yet—we estimate positive EBITDA by fiscal 2023—the product has seen share gains despite a solidly premium price point. A2 Milk is available at Wegmans for nearly 4 times the price of store-brand milk, more than double Dean Foods' branded product, substantially above private-label organic milk, and slightly higher than Coca-Cola's lactose-free and protein-rich Fairlife milk.
Outside of premium pricing, other intangible assets include a2's exclusive rights to market the perceived benefits of A1-protein-free milk until 2023 under patent, along with several other pieces of intellectual property, and license approval to import its products into China under regulations put in place starting January 2018—an accomplishment that Australian organic-milk competitor Bellamy's has struggled to achieve. In all, the firm's operating margins have skyrocketed to north of 30% from less than 1% in fiscal 2015, compared with midteens at Nestle, Danone, and Bellamy's; 25% for infant-formula focused Mead Johnson (in 2016, prior to being acquired by Reckitt Benckiser); and just 2% for commodity-milk-focused Dean Foods.
A2 Milk's business strategy supports sky-high returns on invested capital. The company does not produce its own milk, but instead contracts with local dairy farmers or third-party producers to produce milk from genetically tested cows that do not produce the A1 protein. This milk is processed at a2-owned sites for fresh milk in Australia, but is otherwise sourced and produced by New Zealand company Synlait (of which a2 also owns a 19.8% share) for infant formula in Australia, New Zealand, and China; by Fonterra—under a recently signed agreement—for dairy in potential growth markets; and by local third-party partners in the US With this capital-light business model, a2's ROICs have leapt to more than 100%, including goodwill, in fiscal 2020, from low single digits in fiscal 2015. We expect further strong growth, solid long-run margins, and a lack of sizable capital requirements leading to returns averaging 30% through fiscal 2026. Even if we were to capitalize 15% of the company's cost of goods sold, which represents the gross margin captured by publicly traded Synlait, ROICs would still average comfortably above our estimate weighted average cost of capital over the next 10 years.
In all, we expect the company's pricing premium and market share gains to continue. However, there are risks on the horizon for a2 that prevent a wide moat rating, despite incredibly strong profitability. The company faces formidable competition in the Chinese infant formula market from large international dairy conglomerates, and while we forecast continuing share gains over the coming decade as consumers continue to flock to international brands following food-safety scares in recent years, the marketing and promotional arms of Nestle, Danone, and Reckitt Benckiser could prove to be sizable impediments to A2 participating in this uplift. As evidence, alongside key genetic-testing patents expiring in recent years, Nestle launched Atwo, its own A1-protein-free infant formula product, in early 2018, and Danone launched an A2 rival under its Cow & Gate brand in Hong Kong. A2 Milk believes these developments will help to expand the overall A2 category, with the products taking share from traditional offerings, and Atwo in particular is priced at a significant premium to a2 Platinum. But a situation in which these products become substitutes for a2 Platinum could drive down a2 Milk's market share and reduce ROICs, including capitalized cost of goods, to 24% by the end of the next 10 years versus nearly 40% in our base case. Nonetheless, even in this bear case, ROICs remain well above our estimated 10% WACC.
We also see risk from future scientific developments and potential regulatory responses, but believe the a2 brand is strong enough to withstand most challenges. The science behind the benefits of drinking milk that excludes the A1 protein is inconclusive, with many original a2 Milk claims that A1 protein consumption has serious negative side effects not substantiated in follow-up research by independent investigations or government bodies. Subsequently, a2 Milk has relied on messaging that suggests A2-only dairy products prevent stomach discomfort for those with lactose sensitivity, although again, the studies supporting this claim have been small and inconclusive. Still, these facts haven't stopped sizable market share gains, and we believe anecdotal consumer experience and strong brand positioning will protect a2's premium pricing even if government bodies limit the company's ability to make similar health claims in the future.
We don't believe a2 has carved a durable cost advantage. The A1-protein-free milk production process is identical to traditional milk production; the difference stems from determining—by genetic testing—which cows in the herd will produce milk with only the A2 protein. But despite this, a2 and its supply partners have agreed to pay farmers a premium over the farmgate milk price, to lock in supply and incentivize further A1-protein-free production. Moreover, both Fonterra and Synlait operate with slimmer margins and economic profits. Synlait, which produces all of A2 Milk's infant formula at present, posted EBITDA margins of about 13% in fiscal 2020, along with ROICs in the low teens, while Fonterra generated a lower 7% margin. A2 Milk has signed medium-term contracts with these suppliers, with the Fonterra agreement set up on a rolling three-year basis, and the Synlait deal set to run through fiscal 2025 after an extension signed in 2019.
Fair Value and Profit Drivers
Our fair value estimate for a2 Milk is NZD 8.00 per share. We forecast double-digit annual earnings growth over the next five years, justifying the lofty 32 price/forward earnings multiple our valuation implies.
We forecast revenue growing at an 8% yearly clip through fiscal 2029. Infant formula is the most substantial driver of our outlook. This product makes up the vast majority sales, and we project 6% annual top-line gains for the next decade. We expect China will remain the lion's share of a2's infant formula sales. We estimate that the country, either through direct sales or indirect consumption via Australian third parties, makes up more than 90% of a2's infant formula demand. We forecast a2 enjoying high-single-digit annual revenue growth in this geography, ahead of mid-single-digit market growth, owing to volume share gains and continued solid pricing power.
Outside of infant formula, we expect a 5% 10-year revenue CAGR for fresh milk, which made up about 18% of fiscal 2024 sales, and 5% annual gains for other products. These assumptions are ahead of industry growth rates, driven by market share gains, geographic expansion, and launches of other dairy products.
We expect strong margin performance to somewhat reverse from negative mix shifts and increased marketing and distribution costs to support the Chinese label business. Infant formula generates higher profit margins than a2's other offerings, which has helped to drive EBIT margin to 32% in fiscal 2020 from 1% in fiscal 2014, but we expect the lower-margin Chinese-label business to outgrow English label, placing some mix shift within the business. We forecast that rising contribution from this product, along with leverage of employee and other administrative costs, will maintain lofty margins. But with infant formula already a large piece of a2's business, and our expectation that marketing expense will outpace revenue gains in the near term, we see EBIT margins constrained at around 22% by fiscal 2029.
A2 has limited capital reinvestment needs, given that it outsources most milk sourcing and processing, and we see a solid near-100% of net income converted to free cash most years. We use a 10% weighted average cost of capital to discount a2's cash flow, consisting of a 9% cost of equity, and a 1% country risk premium to account for the company's heavy exposure to China.
Risk and Uncertainty
We assign a a2 Milk a Morningstar Uncertainty Rating of High. Although the firm offers fresh milk, infant formula, and other dairy products, we view a2 as essentially a single-product company, as its outlook hinges upon the continued demand for A1-protein-free dairy. Past scientific studies are inconclusive as to the health benefits of consuming A2-only milk versus traditional dairy, but some consumers anecdotally suggest improved digestion. Follow-up scrutiny could uncover underlying proof of such claims or dispute them entirely, which could drive an outcome that differs significantly from our base-case expectations.
A2 also operates in a competitive field. The company holds only a roughly mid-single-digit share of the fragmented Chinese infant formula market, with international dairy majors such as Danone, and local players such as Feihe commanding much larger positions. The loftier market budgets of bigger competitors could stifle a2's market share gains.
Supplier concentration is another risk. A2's infant formula has been exclusively manufactured by New Zealand's Synlait, of which a2 owns a minority stake. Synlait has proven capable to date, keeping up with massive growth in the product since 2014, and gaining Chinese Food and Drug Administration approval for imported product in 2017. However, risk remains that Synlait's future supply of A1-protein-free milk could become constrained, or that the firm could lift prices at a faster clip. To diversify, a2 has signed an agreement with fellow New Zealand milk producer Fonterra, for fresh milk in New Zealand as well as infant formula and other dairy products in future geographies. But there's also a risk that volume growth may prove lower than anticipated, which could lead to oversupply, price discounting by distributors, and pressure from suppliers.
Capital Allocation
We assign a2 Milk a Standard Morningstar Capital Allocation Rating based on our assessment of balance sheet risk, investment efficacy, and shareholder distributions.
A2's balance sheet is in sound condition. Apart from the NZD 38 million in debt as part of the 75% ownership in Mataura Valley Milk, a2 holds no debt and only minimal operating lease obligations on its balance sheet, and runs its business without need for major capital expenditures. With a net cash position of about AUD 1 billion (including Mataura Valley debt) at June 30, 2024, and limited working capital requirements, the company should generate robust free cash flow, typically converting nearly 100% of net profit after tax to free cash.
Investment efficacy is fair. The firm has expanded its infant formula business from essentially nothing five years ago to the vast majority of earnings now, which has supported a major expansion in profitability and return on invested capital. However, the company is now entering a phase of substantial marketing and personnel investment, which will require heightened diligence in managing returns and allocating capital. However, in 2021 persistently high inventory through the sales channel stifled reordering from key corporate daigou partners, weighed on market pricing, and led to ageing of available product—leading to significant write-downs and a slowdown of reordering.
Shareholder distributions are appropriate. The company's balance sheet comfortably managed the NZD 150 million on-market buyback flagged in August 2022. With a2 shares at a discount to our fair value estimate, the buyback is marginally accretive to our fair value estimate. A2 has opted to not pay a dividend, but has indicated this as a potential future use of profits. This is prudent given the significant growth available to the company through market share gains, and management outlining the potential to invest with partners in product manufacturing to reduce supplier concentration risk. We assume dividends starting in fiscal 2027, at a 50% payout ratio of net profit after tax.
Quote from: Teitei on Aug 20, 2024, 08:09 AMHardly a hissy fit when results came in lower than expectations and with a subdued outlook, especially when sp was primed for a very positive outlook.
Sp before result announcement went as high as $8.00 - that's a PER of 34.5 times (!!) so was trading on very high expectations.
At closing price of $6.27, still trading on a PER of 27 times!
Savage sp drop is what happens when any company disappoints the market.
Turnover of $93m on ASX certainly suggests massive down weighting by instos who bought in at lower levels.
For every seller there is a buyer, these insto's like playing with each other.
Quote from: Left Field on Aug 20, 2024, 04:00 PMMorningstar's view...... analysts all over the place with their forecasts..... (probably written by AI.)
~
~
hmm ... amazing how often one can warm up the often repeated and never delivered promises of ATM. But hey, yes - one day pigs will learn to fly and ATM will be good for their promises.
Interesting to note that there are (as for any other share) plenty of "fair values" for the SP around. I note that Morningstars $8 NZ is the highest valuation currently available. Wondering whether they put their mouth where their money is?
FoBar said in July $6.55 NZ and some of the others are e.g. Guru Focus at $2.32 (AU) and Alpha Spread at $4.58 (AU, I think). Not that I would put money on any of the "valuations", but with speculative stocks like A2M its typically a safe bet that all of them are too optimistic.
Personally I would see them (based on earnings and past earnings growth - revenue growth is irrelevant) around NZ$3 fair value (not a steal ...), and starting to look interesting below NZ$2.50.
Obviously - if they perform miracles they might be worth more, its just - I am not a believer.
Maybe GF is this time not too far off the mark?
Quote from: BlackPeter on Aug 20, 2024, 04:48 PMhmm ... amazing how often one can warm up the often repeated and never delivered promises of ATM. But hey, yes - one day pigs will learn to fly and ATM will be good for their promises.
Interesting to note that there are (as for any other share) plenty of "fair values" for the SP around. I note that Morningstars $8 NZ is the highest valuation currently available. Wondering whether they put their mouth where their money is?
FoBar said in July $6.55 NZ and some of the others are e.g. Guru Focus at $2.32 (AU) and Alpha Spread at $4.58 (AU, I think). Not that I would put money on any of the "valuations", but with speculative stocks like A2M its typically a safe bet that all of them are too optimistic.
Personally I would see them (based on earnings and past earnings growth - revenue growth is irrelevant) around NZ$3 fair value (not a steal ...), and starting to look interesting below NZ$2.50.
Obviously - if they perform miracles they might be worth more, its just - I am not a believer.
Maybe GF is this time not too far off the mark?
Well if you don't like something then you would have a natural bias toward the lowest tp, personally I think their fair price valve is bollocks and $8 is far more likely a year from now.
Quote from: Breezy on Aug 20, 2024, 04:32 PMFor every seller there is a buyer, these insto's like playing with each others dicks.
For every buyer, there is a seller too? So what's the point?
ATM is no different from any multi-billion $ market cap stock - Instos make the market, not retail.
Bet you would love to have them massage your stock as well?
Quote from: Breezy on Aug 19, 2024, 08:35 PMPretty savage and yes retail have been a non event in this stock for years now, its all about machine manipulation by the Insto's.
Quote from: Buzz on Aug 19, 2024, 08:09 PMThat was a blow to the SP, looks more like an attack on the limit sells by the machines. Now only 56% up from the Nov'23 low, that's quite a beating in one day! Overdone imo, market has a hissy fit (takes profits) and sets up a buy back, near 20% lower than Friday. Retail is not calling the shots on this one.
The market prices a share based on forward earnings. When the company fails to provide guidance that meets analysts' future earnings expectations, the price drops. This is called price discovery. A2 is a low growth company and should be priced accordingly. Its high growth days are behind it. Time to pay a dividend if it wants to support the share price.
Interesting close tonight.... 300k at $6.11
Be interesting to see how the market reacts tomorrow to SML's Cap raise news.
Quote from: Left Field on Aug 20, 2024, 07:00 PMInteresting close tonight.... 300k at $6.11
Be interesting to see how the market reacts tomorrow to SML's Cap raise news.
Probably have a bounce.
I'm actually quite relieved I'm not being asked for more capital for Synlait.
Anyone who bought in the low to mid 30 cent mark like I did, will be pleased with this deal.
ATM's view of the Cap raise
GENERAL: ATM: a2MC to support and participate in Synlait equity raise
The a2 Milk Company Limited (a2MC, the Company) notes the announcement made
today by Synlait Milk Limited (Synlait - NZX: SML; ASX: SM1) providing an
update in relation to its proposed recapitalisation to reduce Synlait's debt.
Synlait's recapitalisation proposal includes a proposed equity raising of
approximately NZ$217.8 million by way of a:
o $185 million issue of new shares to Bright Dairy Holding Limited at an
issue price of $0.60, which will increase its shareholding in Synlait from
39.01% to 65.25%; and
o $32.8 million issue of new shares to a2MC at an issue price of $0.43, which
will result in a2MC retaining its holding of 19.83%.
Synlait has also announced that it is in the final stages of a refinancing of
its bank facilities.
Synlait has provided notice of a Special Shareholders' Meeting (SSM) which is
required in connection with Synlait's recapitalisation and which will be held
on Wednesday 18 September 2024 at 9.00 am NZT. Details of Synlait's SSM are
set out in the notice of meeting released today and available to view at
https://www.nzx.com/companies/SML/announcements.
The conditions to a2MC's participation are set out in Synlait's notice of
meeting.
As noted in a2MC's market announcement of 16 August 2024, the completion of
Synlait's equity raise and the refinancing of Synlait's existing banking
facilities are required as a condition to the settlement of the various
disputes subject to arbitration with Synlait, including the exclusivity
dispute, pricing disputes, and various other disputes.
a2MC's decision to support Synlait's recapitalisation plan reflects the
strategic importance to a2MC of the continued stability of production at
Synlait's Dunsandel manufacturing site.
While all attention has been on SML's cap raise survival strategy, it seems ATM has negotiated themselves a much stronger position.
1.) ATM now has full control of its IP
2.) ATM is able to manufacture its IP products elsewhere, or with third parties
3.) ATM has negotiated a new production slot at Dundandel ( likely for a second China label SAMR product.)
4.) ATM is now a stronger partner with Bright Dairy in its control of SML
5.) Bright dairy now has a vested interest via a stronger partnership in helping ATM expand in the key market of China
6.) ATM's approx 76 mill new SML shares at $0.43 are at a substantial discount to Brights $0.60c.... and if the new SML shares start trading around $0.50c (as seems likely) then ATM is already 'in the money' with their new shares.
Interesting times.
Quote from: Left Field on Aug 21, 2024, 09:19 AMWhile all attention has been on SML's cap raise survival strategy, it seems ATM has negotiated themselves a much stronger position.
1.) ATM now has full control of its IP
2.) ATM is able to manufacture its IP products elsewhere, or with third parties
3.) ATM has negotiated a new production slot at Dundandel ( likely for a second China label SAMR product.)
4.) ATM is now a stronger partner with Bright Dairy in its control of SML
5.) Bright dairy now has a vested interest via a stronger partnership in helping ATM expand in the key market of China
6.) ATM's approx 76 mill new SML shares at $0.43 are at a substantial discount to Brights $0.60c.... and if the new SML shares start trading around $0.50c (as seems likely) then ATM is already 'in the money' with their new shares.
Interesting times.
Good post but the elephant in the room which to date the market is not ignoring, is that we have a very low growth company with a subdued growth outlook trading on 27 times FY25's earnings. Just as well growth is going to be much stronger in FY26 and beyond, or is it ?
Basil I get your point. I've posted previously that ATM need to get MVM on line and diversify away from their reliance on China via other markets such as USA, Singapore, Sth Korea etc. I think they are in a strong position to do this successfully, but it won't happen overnight......
In the meantime I only have 3% of my portfolio allocated to Dairy via free-held ATM shares. Happy to sit on this. I've never held SML.
Quote from: Left Field on Aug 21, 2024, 09:19 AMWhile all attention has been on SML's cap raise survival strategy, it seems ATM has negotiated themselves a much stronger position.
1.) ATM now has full control of its IP
2.) ATM is able to manufacture its IP products elsewhere, or with third parties
3.) ATM has negotiated a new production slot at Dundandel ( likely for a second China label SAMR product.)
4.) ATM is now a stronger partner with Bright Dairy in its control of SML
5.) Bright dairy now has a vested interest via a stronger partnership in helping ATM expand in the key market of China
6.) ATM's approx 76 mill new SML shares at $0.43 are at a substantial discount to Brights $0.60c.... and if the new SML shares start trading around $0.50c (as seems likely) then ATM is already 'in the money' with their new shares.
Interesting times.
SML opened at$0.45. So it appears they have made a bit on their added investment. But goes no way to recoup the SP losses from all the other cash they have pumped into Synlait.
I suppose A2 have come out of this reasonably well. They essentially have got what they need - which is DUnsandle. Along with support from Bright.
It does come with an anchor in Pokeno - so hopefully that rights itself.
This outcome has essentially cost A2 nothing in the way of cash. So time for a dividend.
Interesting developments in China could benefit ATM/Bright/SML
https://edition.cnn.com/2024/08/21/business/china-eu-dairy-trade-tariffs/index.html
Crikey MVM not likely to be profitable till 2026/7......one wonders why?
https://www.stuff.co.nz/business/350387702/mataura-valley-milk-not-expected-be-profitable-until-2027
They are probably saying "good things take time."
Quote from: Left Field on Aug 22, 2024, 07:43 AMInteresting developments in China could benefit ATM/Bright/SML
https://edition.cnn.com/2024/08/21/business/china-eu-dairy-trade-tariffs/index.html
Investing in shiny steel was always going to be a drag on profits
One reason I hope they dont end buying a big factory
Quote from: winner (n) on Aug 25, 2024, 05:54 PMInvesting in shiny steel was always going to be a drag on profits
One reason I hope they dont end buying a big factory
Likewise sitting on $650+ cash year after year.
Trading halt ASX
What's up guys
Quote from: winner (n) on Sep 27, 2024, 01:41 PMTrading halt ASX
What's up guys
Had a big spike in SP earlier on. And then a big drop.
Heres the action on the ASX today. Note opening SP. Early trades and volume
a2m.png
Possible take over offer, let the games begin.
https://api.nzx.com/public/announcement/439048/attachment/428317/439048-428317.pdf
Wonder who they acquiring
Maybe one of the Fontera brands ...or an Aussie company?
Quote from: winner (n) on Sep 27, 2024, 03:10 PMWonder who they acquiring
Maybe one of the Fontera brands ...or an Aussie company?
Presumably it is reasonably substantial given it will take until Tuesday to write up the announcement.
Quote from: Minimoke on Sep 27, 2024, 03:18 PMPresumably it is reasonably substantial given it will take until Tuesday to write up the announcement.
Hope it's not heaps more stainless steel ....marketing is their game
Be funny if they bought Synlait ...
But no way
Quote from: winner (n) on Sep 27, 2024, 03:21 PMHope it's not heaps more stainless steel ....marketing is their game
Locally Pokeno is for sale. And Dairworks remains on the market.
Quote from: winner (n) on Sep 27, 2024, 03:26 PMBe funny if they bought Synlait ...
But no way
No movement on SML's SP. So we can conclude its nothing to do with them.
Quote from: Minimoke on Sep 27, 2024, 03:36 PMNo movement on SML's SP. So we can conclude its nothing to do with them.
BUB.ASX is also up today on solid volume. Coincidence? No announcement there, but also no trading halt.
Motley Fool (https://www.fool.com.au/2024/09/27/why-is-this-asx-all-ords-share-soaring-18-today/) links both of these to China stimulus measures (https://www.reuters.com/markets/asia/china-issue-284-bln-sovereign-debt-this-year-help-revive-economy-sources-say-2024-09-26/), but if so IMO it's a big overreaction by the market. And it also doesn't meld with A2's comment on some potential acquisition by them.
Quote from: bulltrap on Sep 27, 2024, 03:59 PMBUB.ASX is also up today on solid volume. Coincidence? No announcement there, but also no trading halt.
Motley Fool (https://www.fool.com.au/2024/09/27/why-is-this-asx-all-ords-share-soaring-18-today/) links both of these to China stimulus measures (https://www.reuters.com/markets/asia/china-issue-284-bln-sovereign-debt-this-year-help-revive-economy-sources-say-2024-09-26/), but if so IMO it's a big overreaction by the market. And it also doesn't meld with A2's comment on some potential acquisition by them.
Both stocks saw substantial and unususal volume in the last hour of trading last night, and first thing this morning. It could be related to the Chinese stimulus measures, and perhaps A2 has misinterpreted that as a leak of whatever it is they have in the works?
BUB is currently valued at $112M, (just a smidge over 1 x their FY25 revenue of $100M) so even if A2 did pick them up it would hardly be a material acquisition for A2.
Quote from: KW on Sep 27, 2024, 04:20 PMBUB is currently valued at $112M, (just a smidge over 1 x their FY25 revenue of $100M) so even if A2 did pick them up it would hardly be a material acquisition for A2.
Just throwing it out there, and I agree it doesn't add up - if A2 was planning to acquire Bubs and it leaked, you'd expect Bubs to be soaring and A2 more muted, yet both are trading up 10-15%.
Another theory floating around is A2 acquisition of Fonterra brands. One point in favour of Bubs is that A2 could afford a cash purchase. Fonterra brands were expected to fetch a few $B, which would be a stretch for A2.
Quote from: bulltrap on Sep 27, 2024, 04:35 PMJust throwing it out there, and I agree it doesn't add up - if A2 was planning to acquire Bubs and it leaked, you'd expect Bubs to be soaring and A2 more muted, yet both are trading up 10-15%.
Another theory floating around is A2 acquisition of Fonterra brands. One point in favour of Bubs is that A2 could afford a cash purchase. Fonterra brands were expected to fetch a few $B, which would be a stretch for A2.
Another possibility is Reckitt is looking to offload Mead Johnson, which has been a bit of a disaster for them. Although I dont know that anyone would want to buy them with the lawsuits hanging over it (IF being held responsible for the death of premature babies).
well that was a bit of a fizzer. A2 in early stage discussions to buy a manufacturing facility.
Quote from: Minimoke on Sep 30, 2024, 02:22 PMwell that was a bit of a fizzer. A2 in early stage discussions to buy a manufacturing facility.
maybe they should try making the one they've got profitable first?
Quote from: KW on Sep 30, 2024, 03:50 PMmaybe they should try making the one they've got profitable first?
Agree ...but will it ever be that profitable?
Marketers don't make good production people
Number of marriages in 2024 at a record low - down 16.6% from 2023. Babies follow marriage.
https://edition.cnn.com/2024/11/04/china/china-marriages-on-track-low-intl-hnk/index.html
Babies follow marriage.
Thought it was the other way round.?.lol
Quote from: lorraina on Nov 12, 2024, 09:09 AMBabies follow marriage.
Thought it was the other way round.?.lol
Just one of these chicken and egg discussions, though - if we think about it - there does not need to be a correlation at all. Babies without marriage are not unheard of, and the other way around it happens as well.
Anyway - globe reached peak human, i.e., no matter who is first - from here # of people will drop. Bad for infant formula, but probably good for the planet.
Quote from: BlackPeter on Nov 12, 2024, 10:24 AMAnyway - globe reached peak human, i.e., no matter who is first - from here # of people will drop. Bad for infant formula, but probably good for the planet.
I think you mean the population growth rate has peaked... global population not expected to peak until the latter part of this century. same sentiment applies though, a2 will have to diversify.
Quote from: raW tent Buffer on Nov 12, 2024, 10:35 AMI think you mean the population growth rate has peaked... global population not expected to peak until the latter part of this century. same sentiment applies though, a2 will have to diversify.
OK - there are a handful of models around, predicting peak human somewhere between now and 2085.
We might sit together in 2100 to review which one of the models was right ... but, as you say - it doesn't really matter for A2. Whenever (within the range of above models) humanity will sit at peak human - A2's target markets (NZ, Australia, US and above all China) are clearly already dropping now. Birth rates ways below sustainability and overall population (net migration) dropping as well.
Finally some good news for shareholders, guidance upgrade and a divi coming. Should stem the SP bleed
Quote from: raW tent Buffer on Nov 22, 2024, 09:58 AMFinally some good news for shareholders, guidance upgrade and a divi coming. Should stem the SP bleed
True - Elon Musk wants the US to start with "extreme breeding".
https://www.theguardian.com/commentisfree/2024/nov/19/he-has-already-fathered-many-children-now-musk-wants-all-of-the-us-to-embrace-extreme-breeding
No doubt his buddy Trump will hands on help with the program and the US will follow like a flock of sheep. They always do.
Hey, and all these extremely bred babies will need lots of ATM IF to turn out as extremely bred adults. No doubt this will increase the need for A2 IF.
Quote from: raW tent Buffer on Nov 22, 2024, 09:58 AMFinally some good news for shareholders, guidance upgrade and a divi coming. Should stem the SP bleed
As an initial buyer of ATM back in the days at 50c and now freeholder of a nice sized holding I'm liking today's news!
https://api.nzx.com/public/announcement/442416/attachment/432552/442416-432552.pdf
Yeah. We are back to where we were Sept 2017.
That cash pile of theirs accounted for 26% of their net profit ($40M interest income out of $153M profit). As cash is returned to shareholders, so too will their net profit fall.
Quote from: Left Field on Nov 22, 2024, 12:23 PMAs an initial buyer of ATM back in the days at 50c and now freeholder of a nice sized holding I'm liking today's news!
https://api.nzx.com/public/announcement/442416/attachment/432552/442416-432552.pdf
I sold mine 5 years ago and bought a house, which has gone up 50%+ since then.
Quote from: KW on Nov 22, 2024, 12:48 PMI sold mine 5 years ago and bought a house, which has gone up 50%+ since then.
Well done you! Similar success story here..... tho I held on to a few (for sentimental reasons) and am happy to now be getting a useful return on these to further fund my happy retirement.
ATM was a great investment back in the days!
Quote from: KW on Nov 22, 2024, 12:44 PMThat cash pile of theirs accounted for 26% of their net profit ($40M interest income out of $153M profit). As cash is returned to shareholders, so too will their net profit fall.
Who said that this cash pile will be returned to shareholders? It will be used to develop the business. Whatever is left of this pile might be returned to shareholders as special dividends. Upcoming regular dividends will be paid out of future profit.
Somebody pointed out to me today that if A2 achieve the high single digit sales growth in FY25 they'll be back to where they were in 2020
Been a tough last 5 years for them
Craigs DOWNGRADE A2 Milk
A but worried about decking birth rate in China
Just neutral now
Quote from: winner (n) on Feb 14, 2025, 02:03 PMCraigs DOWNGRADE A2 Milk
A but worried about decking birth rate in China
Just neutral now
It has actually been reported that
"Last year (2024) saw a slight rise in births after a lull due to the pandemic and because 2024 was the Chinese zodiac year of the dragon - with children born that year considered likely to be ambitious and have great fortune."
That said its obvious they arent breeding like rabbits.
Sorry mini ...... reason for downgrade was "a sharp decline in marriages" in China likely impacting future birth rates.
Marriages fell to a record low, a 20.5% drop from the year before. Marriage is a required precursor for babies as its not culturally acceptable to have babies out of wedlock.
Also divorces are on the rise.
https://edition.cnn.com/2025/02/10/china/china-marriage-registrations-record-low-2024-intl-hnk/index.html
$0.085 first ever dividend. finally a return to shareholders
$91.725 half year net profit on $893m operating revenue up 10.1%
More specifically, the Company:
1. Achieved double digit revenue growth with full year revenue and earnings guidance upgraded
2. Delivered English label IMF2 double-digit revenue growth, supported by English label market recovery
3. Continued to gain record market share in China label IMF whilst minimising impact from temporary supply constraints
4. Ramped up innovation launching new products in IMF and Other Nutritionals targeting infants, kids and seniors segments
5. Introduced dividend policy for the first time in Company history and declared interim dividend for 1H25
Quote from: winner (n) on Feb 14, 2025, 02:03 PMCraigs DOWNGRADE A2 Milk
A but worried about decking birth rate in China
Just neutral now
What do we think of Craigs analysis now?
Or ForBar who said "Forsyth Barr analysts don't expect any major surprises in the first-half result of NZX-listed The a2 Milk Company (ATM), given the latest data from research group Kantar.
The data for a2 Milk's first half highlights low single-digit growth, with a strong gain in market share in the second quarter, mainly from China Label.
Growth, however, is slightly below consensus infant formula expectations, said Forsyth Barr analysts Matt Montgomerie and Benjamin Crozier.
"However, given data volatility, ATM's track record of exceeding Kantar's China Label growth, and recent revenue gains in other areas (primarily Mataura Valley Milk and Nutritionals), we don't anticipate material surprises in ATM's 1H25 result," they said."
Best but Mini is the bit about what they doing in China which David can't share with us today.
Quote from: winner (n) on Feb 17, 2025, 09:21 AMBest but Mini is the bit about what they doing in China which David can't share with us today.
This sounds promising
"entry into China based manufacturing in partnership with Shanghai Howell Nutrition Dairy Co., Ltd for
a new fortified
seniors nutrition range of three products using a2 Milk® powder produced at MVM;"
Sounds like a great mitigation strategy to counter lower marriage rates.
Wait till XI invades TW and with trump now best buddies with Putin all bets are off...
this stock is now a massive risk..
Quote from: Waltzing on Feb 17, 2025, 09:40 AMWait till XI invades TW and with trump now best buddies with Putin all bets are off...
this stock is now a massive risk..
Well, the market seems to like it. up over 10% on open
Beat the analysts expectations and market likes it.
Up 11% on open in NZ.
Quote from: Minimoke on Feb 17, 2025, 10:03 AMWell, the market seems to like it. up over 10% on open
a very good H1 result imo, up on almost all metrics, a $Billion cash in bank, maiden dividend announced, H2 guidance upgrade. NZX ATM SP opens +10.9%
Quote from: Buzz on Feb 17, 2025, 10:05 AMa very good H1 result imo, up on almost all metrics, a $Billion cash in bank, maiden dividend announced, H2 guidance upgrade. NZX ATM SP opens +10.9%
And only $61.5m going to the dividend
Can someone enlighten me as to why ATM holds so much cash ?
Quote from: Dolcile on Feb 17, 2025, 11:27 AMCan someone enlighten me as to why ATM holds so much cash ?
Directors hold the view they know better than shareholders on what to do with shareholder money.
They have been promising mergers and acquisitions for years. But all they managed to do was chuck a bit of cash at Synlait and Mataura.
So the cash just keeps building up. Until they recently advised the market they are useless at M&A and its time to give some of the cash back to shareholders.
Good to see A2 finally getting some capital gain on it re-investment in Synlait.
with all the risk out there in the world they might need it to diversify one day....
nothing like a big moot when your fighting in a big riskie world...
lets hope at the mid terms the houses changes and there is protest in the streets and they start singing protest songs ...
now this may not seem like much for this stock but anything that keeps the world in balance helps NZ exporters...
last NZ needs is more world risk....
export , export, export... and pray...to the gods of agriculture... now which greek god was that?
https://en.wikipedia.org/wiki/Demeter
Quote from: Minimoke on Feb 17, 2025, 01:34 PMGood to see A2 finally getting some capital gain on it re-investment in Synlait.
SML at 90 cents — only $214m to go to break even.
Average cost $2.69
But it was a strategic investment eh
Quote from: Waltzing on Feb 17, 2025, 02:21 PMwith all the risk out there in the world they might need it to diversify one day....
nothing like a big moot when your fighting in a big riskie world...
lets hope at the mid terms the houses changes and there is protest in the streets and they start singing protest songs ...
now this may not seem like much for this stock but anything that keeps the world in balance helps NZ exporters...
last NZ needs is more world risk....
export , export, export... and pray...to the gods of agriculture... now which greek god was that?
https://en.wikipedia.org/wiki/Demeter
Demeter.
Quote from: winner (n) on Feb 17, 2025, 02:31 PMSML at 90 cents — only $214m to go to break even.
Average cost $2.69
But it was a strategic investment eh
I did say re investment, not all investments.
Quote from: Minimoke on Feb 17, 2025, 03:05 PMI did say re investment, not all investments.
Up $36m on thev'reinvestment'
So now only down $250m on original investments
Quote from: winner (n) on Feb 17, 2025, 04:13 PMUp $36m on thev'reinvestment'
So now only down $250m on original investments
Thankyou Mr Gloom Merchant for pointing that out.
Quote from: winner (n) on Feb 17, 2025, 04:13 PM....So now only down $250m on original investments
Peanuts for a long term investor with a billion $'s in the bank.
Great day for ATM holders (.....even better for 'free' holders!)
Australia has woken up and we are off again. Up another 3% this arvo. Currently $8.11
with the CCP now realising that the private sector in china tech space is important and JM invited back to the table has the recent poor performance of the china market caught the CCP between the toilet and the share market...
risk just went down a fraction ....
CCP learning that the private sector cant be ignored...
Just book marking a post. Finally breached $9.00 today
Well, Happy days. A day I didnt think I would ever see again. The day I am actually back in positive territory with A2. I've held firm so I now have enough on the plus side to go out and buy a decent bottle of champagne tonight.
SP = $9.21
Summary of recent news by Wordplaya on HC explaining the recent upsurge in ATM's SP.
China unveils childcare subsidies and income boost in new stimulus plan
China's State Council has unveiled a "special action plan" aimed at stimulating domestic consumption, introducing measures to increase household incomes and establish childcare subsidies as the country grapples with weak consumer demand.
The initiative comes as consumer spending in China remains subdued after a slow recovery from COVID-19 disruptions and a prolonged property market slump, which has dampened household confidence and added to deflationary pressures.
The plan was distributed to all regions and departments throughout China with instructions to "vigorously boost consumption, expand domestic demand in all directions, improve consumption capacity by increasing income and reducing burdens", according to a State Council statement on Sunday.
Authorities are instructed to "study and establish a childcare subsidy system", implement flexible employment policies, and open paediatric outpatient clinics during evening hours at general hospitals. The plan also encourages community and employer-operated childcare services.
Chinese authorities are working to combat the country's demographic issues: the population fell for the third consecutive year in 2024, with 2022 marking the first time deaths outpaced births since 1961. Many argue a more comprehensive childcare safety net would encourage families to have more children.
Quote from: Left Field on Mar 17, 2025, 03:28 PMSummary of recent news by Wordplaya on HC explaining the recent upsurge in ATM's SP.
China unveils childcare subsidies and income boost in new stimulus plan
China's State Council has unveiled a "special action plan" aimed at stimulating domestic consumption, introducing measures to increase household incomes and establish childcare subsidies as the country grapples with weak consumer demand.
The initiative comes as consumer spending in China remains subdued after a slow recovery from COVID-19 disruptions and a prolonged property market slump, which has dampened household confidence and added to deflationary pressures.
The plan was distributed to all regions and departments throughout China with instructions to "vigorously boost consumption, expand domestic demand in all directions, improve consumption capacity by increasing income and reducing burdens", according to a State Council statement on Sunday.
Authorities are instructed to "study and establish a childcare subsidy system", implement flexible employment policies, and open paediatric outpatient clinics during evening hours at general hospitals. The plan also encourages community and employer-operated childcare services.
Chinese authorities are working to combat the country's demographic issues: the population fell for the third consecutive year in 2024, with 2022 marking the first time deaths outpaced births since 1961. Many argue a more comprehensive childcare safety net would encourage families to have more children.
Intresting what jitters a share price.
Re pushing the birth rate - many countries have tried that before, some got some short term movements (like parents moving their child wish forward), but so far no country succeeded since the baby boomers to sustainably increase their birthrate.
/cynicism on
No doubt - China will be different and A2M will help large numbers of women with the biological clock already espired to breed like nobody ever bred before.
Lets buy some shares on that!
/cynicism off
https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/finances/
Covered by 9 analysts and trading on 30 times average FY26 eps which is ironically just like the good old days when it was growing very strongly. You be the judge if such a lofty growth multiple should apply, the market thinks it should.
Quote from: BlackPeter on Mar 17, 2025, 09:35 PMIntresting what jitters a share price.
Re pushing the birth rate - many countries have tried that before, some got some short term movements (like parents moving their child wish forward), but so far no country succeeded since the baby boomers to sustainably increase their birthrate.
/cynicism on
No doubt - China will be different and A2M will help large numbers of women with the biological clock already espired to breed like nobody ever bred before.
Lets buy some shares on that!
/cynicism off
Your knowledge of Chinese women biological clock and reproductive ability is a bit fascinating. Are you a gynaecologist by any chance or something? Yes, a number of new born is one of the factors that may have effect on company's performance but not the only one and definitely not an exclusive one. For instance, I'm not sure if you heard or even interested but recently company successfully launched new products targeting seniors and other age groups. New markets? No, haven't heard either?
Don't know what is your definition of "sustainably" but since you clamed that "no country succeeded since the baby boomers to sustainably increase their birthrate" I'll give you just one example. The number of live births in the Republic of Kazakhstan 2000-2022, raw data can be loaded from https://stat.gov.kz/en/industries/socialstatistics/demography/publications/186250/ You also might want to look at Ireland from 1994 to 2009, US from 1975 to 1990, even China 1979 to 1987 and more. I understand you are of German descent, look at official statistic from your home country 1975-1990 and 2006-2021 you might be pleasantly surprised https://www.destatis.de/EN/Themes/Society-Environment/Population/Births/Tables/lrbev04.html#242410
Maybe you should not play with your cynicism switch without checking all facts it can be broken eventually.
00000.png
ok Kiwi investors dont care about new clear winters... they arnt scared of high valuations as no one much is following country statistics but probably should... well these days you can just ask your friend AI chat bot to go figure it out... not need to go down to your local library and find what book and sections has a copy of baby birth states... used to be taught in geography lesson? with a little blow up globe on the teacher desk...
anyway this should keep the local kiwis investors in ATM happy....
till china invades TW with those HUGE strange barges with giant landing ramps on them... what on earth are they for? landing up river somewhere in times of flood?
https://www.bbc.com/news/articles/cx2gk8j06r0o
Quote from: Waltzing on Mar 18, 2025, 08:00 PMok Kiwi investors dont care about new clear winters...
Actually I suspect most Kiwi investors would preferer new clear winters to old foggy ones. Skiing is much more enjoyable on clear winter day :)
Seems like a friend AI chat bot still can learn a thing or two and if it's meant to be "nuclear" winter, well, in that case investing in general and not only in ATM would be the last thing on anybody's mind.
Odd trading patterns over the week. Down a pile yesterday. Up over 6% today.
ATM - got to love them. Just like the good old days when the instos were really working this stock on a daily basis.
I'm looking forward to the inevitable articles from Au Financial Times and Teger.
And $10.00 hit today.
Not very often we see trades like this so early in the day (ie before ASX opens)
a2m.png
Quote from: Minimoke on Mar 19, 2025, 10:18 AMNot very often we see trades like this so early in the day (ie before ASX opens)
a2m.png
Maybe. Not sure however about the significance. The history of ATM clearly shows its neither run by smart boards nor attracted by smart money (an oxymoron anyway). Just one of these casino shares wich go up and down with the flow of hype.
So - yes - it seems to be bubble inflation time. Long may it last for the gamblers (oops - holders), but we know, no bubble inflates forever. Ask Elon :) ;
Sadly BP's been posting the same ole, same ole since ATM was born.....
Back in those days he reckoned ATM had no IP, no 'moat,'no research, Chinese market was rubbish, ATM wouldn't gain market share etc etc...
(Just look back at the ATM thread on the other channel and you'll see what I mean.)
All hype he say's now. Board and Management rubbish.... same ole, same ole sad story.
Disc: My own share portfolio is over $1 mill better off thanks to ATM so of course I'm a tab biased..... and while I sold off most of my holding in the $18 to $21 days, I still hold and have added more since the news of future ATM dividends.
IMO ATM has a useful place in a balanced NZX long term portfolio (with appropriate risk management via TA/FA analysis.)
no risk then... y got a bit of time before XI invades TW... high risk , high reward... bird in hand comes to mind..
10% swing from high to low today is huge
Quote from: winner (n) on Mar 19, 2025, 02:56 PM10% swing from high to low today is huge
And no speeding ticket. Or enquiry.
Tomorrow is ATM's ex dividend date... (Maybe a reason for the recent SP upswing? ) Dividend payment date 4 April.
However on a PE basis near 40 the current SP seems to have gotten ahead of any FA justification.
it could be that if access to the china market continues and the NZ dollar keeps coming under deficit pressure than tnis high multiple might just be a reflection that china is a HUGE market and ATM has more cash in the bank than it seems to know what to do with....
its always been a high p/E stock.... ie what percentage of its trading history has it trader above Normal P/E ranges of 8 to 16..
Quote from: Minimoke on Mar 19, 2025, 10:18 AMNot very often we see trades like this so early in the day (ie before ASX opens)
a2m.png
Closed the day at $9.24. Someone did very well. And someone will be a bit gloomy.
Quote from: Left Field on Mar 19, 2025, 02:22 PMSadly BP's been posting the same ole, same ole since ATM was born.....
Back in those days he reckoned ATM had no IP, no 'moat,'no research, Chinese market was rubbish, ATM wouldn't gain market share etc etc...
(Just look back at the ATM thread on the other channel and you'll see what I mean.)
All hype he say's now. Board and Management rubbish.... same ole, same ole sad story.
Disc: My own share portfolio is over $1 mill better off thanks to ATM so of course I'm a tab biased..... and while I sold off most of my holding in the $18 to $21 days, I still hold and have added more since the news of future ATM dividends.
IMO ATM has a useful place in a balanced NZX long term portfolio (with appropriate risk management via TA/FA analysis.)
and nothing has changed. Just remind us, how much ATM has returned to shareholders so far. Did they pay this year a wee dividend? I think yes, but apart from that - a big fat zero.
So, yes, ATM is just another game to attract the greater fools - and lucky some of us, there seems to be a big supply.
Pretty sad, Left Field, that you need to attack the messenger, but I reccon, this is the last thing left to you when you are running out of arguments. So sharetrader ... just go back to them.
But yes, some people win and some people lose with these hype inflated stocks. Its like with the lottery, glad to hear you say you made some money with them. On the other hand - if this is true - why are you so bitter?
BP recall that the power of story drives corporate value, ie the share price.
A good story adds substance to numbers based on financials
And A2 has a great story and that story is valued at around $3 billion ...without that great story it's share price probably be about $5
Aswath Damodaran has written a lot about the power of stories
Quote from: Waltzing on Mar 19, 2025, 03:41 PMit could be that if access to the china market continues and the NZ dollar keeps coming under deficit pressure than tnis high multiple might just be a reflection that china is a HUGE market and ATM has more cash in the bank than it seems to know what to do with....
its always been a high p/E stock.... ie what percentage of its trading history has it trader above Normal P/E ranges of 8 to 16..
The PE of 30 was warranted back in the day under Geoffrey Babbage's legendary leadership when it was growing eps at about 30% per annum. I don't think its warranted now but if people believe the good times are back and they can grow eps at 20-30% for the foreseeable future, good luck to them I say, and they'll need it.
This out of the Herald which would explain this mornings opening..
Global marketer a2 Milk raced to an intraday high of $10.10 after learning that it will remain in the FTSE Global Equity Index Series (Asia Pacific), but it finished 12c down at $9.24, still up nearly 45% so far this year.
Quote from: winner (n) on Mar 19, 2025, 06:21 PMBP recall that the power of story drives corporate value, ie the share price.
A good story adds substance to numbers based on financials
And A2 has a great story and that story is valued at around $3 billion ...without that great story it's share price probably be about $5
Aswath Damodaran has written a lot about the power of stories
Absolutely - All of human history is driven by great and powerful stories. Paganism, Confucius, Daoism, Buddha, Hinduism, Old Testament, Christianity, Koran and so many more. These stories helped to create amazing faith based enterprises running for millenia and happily making lots of money, accumulating power and furthering the kill rate.
Not as long living, but still powerful are all these stories man made up about nations and nationality. While the kill rate is probably similar than the kill rate of the religious stories, the longevity of these stories is measured only in centuries vs millenia.
And then there are the stories driving (secular) enterprises. Probably less killing (than above, though some of them help nations and religions to kill), less money to be made and a typical lifetime of only a handful of decades, but still - there are some amazing stories around: Tesla, amazon, Google, Coca Cola, MacDonalds, Lockheed Martin, Heckler & Koch, Siemens, Tyssen Krupp, Bosch, BASF, Bayer, BAE Systems ...
Leaves us with the rest ... some people just spring on anything promising them a free lunch. Welcome to the world of Comvita and A2M - and yes, apparantly even they can be worth billions while the bubble is inflated!
... but back from these inspirational stories to boring fundamentals and trends ...
average (10 yr) PE is 44.5;
forward PE (3 yrs) is 32 with a forwad earnings CAGR of 5; Hmmm ... this a growth company?
... and the trend?
Screenshot 2025-03-20 091258.png
Does this really look like a rocket starting through? In the big picture it looks more like a ripple after a big splash.
Anyway - good luck to punters - I think they will need it.
(https://upload.wikimedia.org/wikipedia/commons/a/a5/Tsunami_by_hokusai_19th_century.jpg)
perfect!!!
Quote from: Minimoke on Mar 19, 2025, 05:01 PMClosed the day at $9.24. Someone did very well. And someone will be a bit gloomy.
What a difference a week makes. Now trading at $8.67
From Market Close report -
Global marketer a2 Milk was down 8c to $8.73 after reaching an intraday low of $8.58.
Robertshawe said an a2 Milk competitor, China Feihe, which has 20% of the Chinese infant formula market, has introduced sales incentives with large cash payments for families having babies.
"It looks like a customer acquisition strategy, and it will be interesting to see how this plays out," he said. "If the market gets bigger or a2 Milk starts losing market share, then they will have to compete by offering more sales incentives or spending more on promotions."
Quote from: winner (n) on Mar 27, 2025, 06:52 PMFrom Market Close report -
Global marketer a2 Milk was down 8c to $8.73 after reaching an intraday low of $8.58.
Robertshawe said an a2 Milk competitor, China Feihe, which has 20% of the Chinese infant formula market, has introduced sales incentives with large cash payments for families having babies.
"It looks like a customer acquisition strategy, and it will be interesting to see how this plays out," he said. "If the market gets bigger or a2 Milk starts losing market share, then they will have to compete by offering more sales incentives or spending more on promotions."
Not sure I ever understood the attraction of investing into this bubble.
At current I see an agricultural producer (i.e. high factory costs, no scalability) sitting on a (3yr) forward PE of 32 (remember, analysts are optimists) and a (10y) backward PE of 44 (which is probably closer to how the future will look as well). 44 years to just earn the marketcap.
OK - revenue forward CAGR is 9 (remember the optimistic analysts), but even this works only due to very small earnings in the past, and even a PE of 32 with an earnings CAGR of 9 doesn't look good.
Even the (always optimistic) Graham formula forecasts a share price of only $5 (and only $4 according to the modified beagle formula), but if we stay realistic, the share is probably worth only something like 8.5 to 10 PE, which would be around $2.50.
Not yet considering the headwinds related to falling birth rates and rising competition.
Anybody can help me to understand, why people are prepared to pay for this sharte more than $8? What is the investment case?
Well, Time to take some off the table. Which I did today at $9.14.
And I will congratulate myself on being such a greater investor when I originally bought these at $8.16 while simultaneously ignoring the ones I bought at a higher price.
Anyone else drink the milk?
I havent been able to get it from new World, Countdown or Pak n save for weeks now.
Quote from: Minimoke on Aug 13, 2025, 05:05 PMAnyone else drink the milk?
I havent been able to get it from new World, Countdown or Pak n save for weeks now.
Interesting.....maybe Fontera abandoning A2 pending sale of Anchor?
Fresha Valley (Waipu Northland) offer A2 Protein milk via Woolworths in my area.
FWIW - No longer hold ATM...... switched to FSF last year. GLH.
Quote from: Minimoke on Aug 13, 2025, 05:05 PMAnyone else drink the milk?
I havent been able to get it from new World, Countdown or Pak n save for weeks now.
Yes I do, from New World, but often it's the first of all the milks to be sold out.
We are sad to say that a2 Milk™ by Anchor™ is no longer available under the Anchor™ brand in the New Zealand market. We are working through options to make a2 Milk™ available to our New Zealand consumers again. We do not have anything to share right now but we will provide an update as soon as we can.
In the meantime, a2 Milk™ Full Cream UHT 200ml is available in Costco. a2 Milk™ Premium Instant Milk Powder in Full Cream and Skim is available in selected Chemist Warehouse stores and online.
If you have any further questions, please reach out to the a2™ Careline team on 0800 22 46 32.
https://a2milk.nz/
Quote from: CG on Aug 13, 2025, 05:40 PMWe are sad to say that a2 Milk™ by Anchor™ is no longer available under the Anchor™ brand in the New Zealand market. We are working through options to make a2 Milk™ available to our New Zealand consumers again. We do not have anything to share right now but we will provide an update as soon as we can.
In the meantime, a2 Milk™ Full Cream UHT 200ml is available in Costco. a2 Milk™ Premium Instant Milk Powder in Full Cream and Skim is available in selected Chemist Warehouse stores and online.
If you have any further questions, please reach out to the a2™ Careline team on 0800 22 46 32.
https://a2milk.nz/
How odd. Especially given A2 cows are just down the road from me. Has there been a falling out with Fonterra? is liquid milk not profitable?
Quote from: Minimoke on Aug 14, 2025, 08:35 AMHow odd. Especially given A2 cows are just down the road from me. Has there been a falling out with Fonterra? is liquid milk not profitable?
It may have something to do with A2 needing to maximise its own assets and brand, rather than just licencing the brand to Fonterra. Especially now that Fonterra is selling off its brands to competitors. This might have triggered a break up clause in the contract.
Quote from: KW on Aug 17, 2025, 02:48 PMIt may have something to do with A2 needing to maximise its own assets and brand, rather than just licencing the brand to Fonterra. Especially now that Fonterra is selling off its brands to competitors. This might have triggered a break up clause in the contract.
Exactly.... that's what I was trying to say in post #664
Quote from: Left Field on Aug 13, 2025, 05:13 PMInteresting.....maybe Fonterra abandoning A2 pending sale of Anchor?
Quote from: Left Field on Aug 17, 2025, 05:18 PMExactly.... that's what I was trying to say in post #664
This may appear a bit off topic with the discussion but I determine that as a result of covid international market impacts the niche that sat with likes of A2 cows milk ( predominantly from Jersey lineage Cows) and even more the NZ Dairy Goat industry demise ( BNZ lender of preference 100% bailed post financially growing it ), the value is not that easy for suppliers to access.
Fonterra is limited in the capacity and / or for financial benefit, desire to accommodate differentiates to a standard product such as separating A2, Organic products. Can have bizarre occurrences such as semi filled milk tankers driving past Edendale Southland plant to go to Washdyke in Sth Canty plant, at least Spring 2021 I was being told that by tanker drivers.
ATM may find a means to re new SP heights if Mr Market falls in love, just speculation but some ASX focus on that as fact maybe arising, also some technical analysts are watching, but that's not my expertise at all.
Quote from: Otago K on Aug 18, 2025, 07:04 AMATM may find a means to re new SP heights if Mr Market falls in love, just speculation but some ASX focus on that as fact maybe arising, also some technical analysts are watching, but that's not my expertise at all.
I have long felt that ATM needs to lessen its reliance on China.
With Trump's tariffs it's likely that ATM's USA ambitions will continue to struggle.
Then Fonterra's impending sale of its Anchor brands provides ATM both opportunities and risks. Perhaps we will see ATM market its own fresh milk brand in NZ? (As it has done so successfully in AUS.)
It will be interesting to read the commentary with this years results.
And here they are..... wow exciting MVM and concentrating on Pokeno.... and ATM branded liquid milk underway. Exciting.
https://api.nzx.com/public/announcement/456904/attachment/449698/456904-449698.pdf
FY25 Results
- Delivered record sales of $1.9 billion with double-digit growth in revenue, EBITDA and EPS
- Reached top-4 brand position in China's IMF1 market, a major milestone in brand health and market penetration
- Achieved English label (EL) IMF double-digit sales growth and record market share in China label (CL) IMF driven by
high new user recruitment
- Launched a range of new products targeting growth opportunities in the infant, kids and seniors nutrition segments,
and entered the Vietnam IMF market
- Initiated returns to shareholders, declaring first ever dividends totalling 20.0 cents per share for FY25
Key financials and FY26 Outlook2,3
• Revenue up 13.5% to $1,902.0 million
• EBITDA up 17.1% to $274.3 million with an EBITDA % margin of 14.4% up 0.4 ppts
• Net profit after tax (NPAT) up 21.1% to $202.9 million4
• Basic earnings per share (EPS) up 20.9% to 28.0 cents
• Closing net cash5 of $1,061.2 million up $92.2 million on 30 June 2024 with operating cash conversion of 95%6
• Total FY25 dividends declared of 20.0 cents per share (~71% payout), with a final dividend of 11.5 cents per share
declared (fully franked and ~78% imputed)
• FY26 continuing operations guidance for revenue growth of high-single digit percent versus FY25 and EBITDA %
margin to be approximately 15% to 16% (see full FY26 Outlook in the "2025 Annual results and Supply Chain
Transformation update" announcement)
Supply chain transformation update
Since the end of the financial year, the Company has continued to progress its supply chain transformation strategy
announcing the following transactions today:
• The acquisition of an integrated nutritional manufacturing facility with two CL IMF product registrations, located in
Pokeno, New Zealand, by purchasing all of the shares in Yashili New Zealand Dairy Co., Limited7, from Yashili
International Group Limited (a subsidiary of China Mengniu Dairy Group Limited) for approximately $282 million8 on a
debt and cash free basis; and
• The divestment of a2MC's 75% and China Animal Husbandry Group's (CAHG) 25% shareholding in Mataura Valley Milk
Limited (MVM) to Open Country Dairy Limited (Open Country), with a2MC net proceeds of approximately $100 million
on a cash and debt free basis (conditional on China regulatory filing). MVM will be treated as discontinued operations
and the Company expects to recognise a loss on sale of MVM of approximately $130 million
The Company intends to invest ~$100 million in a multi-year capital investment programme to increase capacity and enhance
capability at the new a2MC Pokeno site with plans to employ more than 100 additional people over time, providing significant
development opportunities to current and future team members.
Strategic rationale
The acquisition and divestment announced today are supported by a clear strategic rationale:
1. Secures opportunity for greater market access to the attractive NZ$23 billion9 CL IMF registered market through
control of two highly sought after product registrations for CL IMF that can be amended to expand the a2™ branded
portfolio with the potential of a third registration over time, all subject to China regulatory approval. a2MC's existing
China label IMF registered product, a2 至初™
, will remain at Synlait
2. Supports growth in core IMF business over time through CL product portfolio expansion and innovation, assisting in
unlocking growth potential in lower tier cities and the domestic online channel
3. Accelerates development of nutritional manufacturing capability. The new a2MC Pokeno site is a world-class fully
integrated nutritional manufacturing facility with proven IMF experience including the current production of a2MC's
new English label products, a2 Genesis™ and a2 Gentle Gold™
4. Provides access to A1 protein free milk pool from New Zealand's highly regarded Waikato region in the North Island for
production of a2™ branded products, under a long-term supply agreement with Fonterra
5. Optimises asset footprint and capacity utilisation through the divestment of MVM whilst retaining access to high
quality A1 protein free ingredients from the site through a commercial supply agreement
6. Generates attractive financial returns over time through vertical manufacturing margin capture and additional brand
contribution, with return on invested capital expected to achieve weighted average cost of capital in FY29
Quote from: Left Field on Aug 18, 2025, 08:22 AMI have long felt that ATM needs to lessen its reliance on China.
With Trump's tariffs it's likely that ATM's USA ambitions will continue to struggle.
Then Fonterra's impending sale of its Anchor brands provides ATM both opportunities and risks. Perhaps we will see ATM market its own fresh milk brand in NZ? (As it has done so successfully in AUS.)
It will be interesting to read the commentary with this years results.
And here they are..... wow exiting MVM and concentrating on Pokeno.... and ATM branded liquid milk underway. Exciting.
https://api.nzx.com/public/announcement/456904/attachment/449698/456904-449698.pdf
FY25 Results
- Delivered record sales of $1.9 billion with double-digit growth in revenue, EBITDA and EPS
- Reached top-4 brand position in China's IMF1 market, a major milestone in brand health and market penetration
- Achieved English label (EL) IMF double-digit sales growth and record market share in China label (CL) IMF driven by
high new user recruitment
- Launched a range of new products targeting growth opportunities in the infant, kids and seniors nutrition segments,
and entered the Vietnam IMF market
- Initiated returns to shareholders, declaring first ever dividends totalling 20.0 cents per share for FY25
Key financials and FY26 Outlook2,3
• Revenue up 13.5% to $1,902.0 million
• EBITDA up 17.1% to $274.3 million with an EBITDA % margin of 14.4% up 0.4 ppts
• Net profit after tax (NPAT) up 21.1% to $202.9 million4
• Basic earnings per share (EPS) up 20.9% to 28.0 cents
• Closing net cash5 of $1,061.2 million up $92.2 million on 30 June 2024 with operating cash conversion of 95%6
• Total FY25 dividends declared of 20.0 cents per share (~71% payout), with a final dividend of 11.5 cents per share
declared (fully franked and ~78% imputed)
• FY26 continuing operations guidance for revenue growth of high-single digit percent versus FY25 and EBITDA %
margin to be approximately 15% to 16% (see full FY26 Outlook in the "2025 Annual results and Supply Chain
Transformation update" announcement)
Supply chain transformation update
Since the end of the financial year, the Company has continued to progress its supply chain transformation strategy
announcing the following transactions today:
• The acquisition of an integrated nutritional manufacturing facility with two CL IMF product registrations, located in
Pokeno, New Zealand, by purchasing all of the shares in Yashili New Zealand Dairy Co., Limited7, from Yashili
International Group Limited (a subsidiary of China Mengniu Dairy Group Limited) for approximately $282 million8 on a
debt and cash free basis; and
• The divestment of a2MC's 75% and China Animal Husbandry Group's (CAHG) 25% shareholding in Mataura Valley Milk
Limited (MVM) to Open Country Dairy Limited (Open Country), with a2MC net proceeds of approximately $100 million
on a cash and debt free basis (conditional on China regulatory filing). MVM will be treated as discontinued operations
and the Company expects to recognise a loss on sale of MVM of approximately $130 million
The Company intends to invest ~$100 million in a multi-year capital investment programme to increase capacity and enhance
capability at the new a2MC Pokeno site with plans to employ more than 100 additional people over time, providing significant
development opportunities to current and future team members.
Strategic rationale
The acquisition and divestment announced today are supported by a clear strategic rationale:
1. Secures opportunity for greater market access to the attractive NZ$23 billion9 CL IMF registered market through
control of two highly sought after product registrations for CL IMF that can be amended to expand the a2™ branded
portfolio with the potential of a third registration over time, all subject to China regulatory approval. a2MC's existing
China label IMF registered product, a2 至初™
, will remain at Synlait
2. Supports growth in core IMF business over time through CL product portfolio expansion and innovation, assisting in
unlocking growth potential in lower tier cities and the domestic online channel
3. Accelerates development of nutritional manufacturing capability. The new a2MC Pokeno site is a world-class fully
integrated nutritional manufacturing facility with proven IMF experience including the current production of a2MC's
new English label products, a2 Genesis™ and a2 Gentle Gold™
4. Provides access to A1 protein free milk pool from New Zealand's highly regarded Waikato region in the North Island for
production of a2™ branded products, under a long-term supply agreement with Fonterra
5. Optimises asset footprint and capacity utilisation through the divestment of MVM whilst retaining access to high
quality A1 protein free ingredients from the site through a commercial supply agreement
6. Generates attractive financial returns over time through vertical manufacturing margin capture and additional brand
contribution, with return on invested capital expected to achieve weighted average cost of capital in FY29
$130m loss on sale of Mataura!
Quick back of the envelope calculation. A 4.1 cent dividend coming up
edit. I see its $0.115
Edit. Market seems to like it. Up 5.5% on open to $9.20. (Yeah!. I'm back in the black again!)
Edit again. So it seems to be a Special dividend of $0.041 and a usual dividend of $0.115
Quote from: Minimoke on Aug 18, 2025, 09:46 AM$130m loss on sale of Mataura!
I've now read the following more detailed ATM FY25 Results and Supply Change info. Lots to absorb and v impressive IMO.
https://api.nzx.com/public/announcement/456904/attachment/449706/456904-449706.pdf
Good to see strong progress in all existing markets along with the newer markets of Vietnam and USA. The supply chain changes make good sense. Margins can only improve. Heading to $2.0 Billion in revenue FY27 (possibly earlier.) $1.1 Billion cash on hand. Well done ATM.
Quote from: KW on Aug 17, 2025, 02:48 PMIt may have something to do with A2 needing to maximise its own assets and brand, rather than just licencing the brand to Fonterra. Especially now that Fonterra is selling off its brands to competitors. This might have triggered a break up clause in the contract.
New Zealand dairy cooperative Fonterra has said it will discontinue the production of its Anchor A2 milk and organic milk offerings for local consumers.
This pivot aims to concentrate efforts on the rapidly expanding lactose-free dairy segment, which has emerged as the fastest-growing category in the country, following protein.A company spokesperson confirmed that the decision to phase out the A2 milk range aligns with the co-operative's broader focus on enhancing its Anchor Zero Lacto product line.This shift follows impressive double-digit growth in sales of the Anchor Zero Lacto 1L Fresh, prompting Fonterra to expand the portfolio to include 2l fresh and 1l UHT formats."This strategic move by the co-op's Oceania consumer business reflects our commitment to meeting consumer demand for lactose-free options," the spokesperson stated. "While Anchor A2 Milk will no longer be available, consumers can still find A1 protein-free fresh milk from other suppliers."It would seem to be a pre-sale cull of non or low performing products, in order to make the books look better for the sale.
Quote from: Minimoke on May 05, 2025, 05:01 PMWell, Time to take some off the table. Which I did today at $9.14.
And I will congratulate myself on being such a greater investor when I originally bought these at $8.16 while simultaneously ignoring the ones I bought at a higher price.
Time to off load some more today at $9.99. These were bought at $8.66 and $7.85.
Remainder of holdings still have me well in the positive - but a good chance to reduce my over weight exposure here.
Now to find a place to stash the cash as deposit rates don't look good at all.
Quote from: Minimoke on Aug 26, 2025, 01:13 PMTime to off load some more today at $9.99. These were bought at $8.66 and $7.85.
Remainder of holdings still have me well in the positive - but a good chance to reduce my over weight exposure here.
Now to find a place to stash the cash as deposit rates don't look good at all.
SPK and FSF are looking good with big divs just around the corner.
Quote from: seaweed on Aug 26, 2025, 10:52 PMSPK and FSF are looking good with big divs just around the corner.
Looks liek those divies are already baked into the SP
Another 3.5% jump today to $10.67. Popped on ASX market opening.
A2 confirming purchase of Pokeno
"With full ownership we gain strategic control over two China label registrations, which we plan to relaunch under The a2 Milk Company brand within 12-18 months, with access to a potential third registration slot over time (all subject to China regulatory approvals). The Pokeno facility is world-class with a proven track record of producing high-quality infant milk formula including our English label products, a2 Gentle Gold(tm) and a2 Genesis(tm)."
Sale of Mataura confirmed to day, effective end of month. One step closer to the $300m special dividend
After all these years is there any science papers on this protein.. ?
Just asking... blind studies.. must cost millions to test something like this...
Quote from: Waltzing on Oct 16, 2025, 09:14 AMAfter all these years is there any science papers on this protein.. ?
Just asking... blind studies.. must cost millions to test something like this...
"A2" is easier to say than "A1 Free". And there isno shortage of works on the problems with A1.
For example this one ("reports linking A1 casein to diseases such as type 1 diabetes, heart disease, and autism.)
https://pmc.ncbi.nlm.nih.gov/articles/PMC10806982/
I wonder if A1 milk will come under investigation by the MAHA movement. Looks like a much more likely suspect at causing autism than paracetamol which has an extremely small risk associated with it, if any.
Nice wee upgrade today. Now looking at low double figure growth.
Infant Milk Formula (IMF), Other Nutritional's and Liquid Milk product categories trading stronger than expected
Currency fluctuations in A2's favour
English label IMF revenue growth expected to be significantly higher than China label IMF revenue growth
NPAT to be slightly up on $202.9m
I'm looking at off loading some more shares so hopefully SP will turn around and start climbing again
China (https://www.cnn.com/world/china)clocked its lowest birth rate on record in 2025 as its population shrank for the fourth year in a row, deepening a demographic challenge (https://www.cnn.com/2026/01/01/china/china-one-child-anniversary-intl-hnk-vis-dst) that could drag on the world's second-largest economy for decades to come.
The rate fell to 5.63 births per 1,000 people in 2025, beneath 2023's low of 6.39 per 1,000, China's National Bureau of Statistics reported on Monday. The drop suggests that a slight uptick in births in 2024 was an outlier rather than a reversal of an otherwise steady decline since 2016.
The question is whether A2 can grow its market share faster than its market shrinks?
It is
Quote from: KW on Jan 19, 2026, 04:14 PMChina (https://www.cnn.com/world/china)clocked its lowest birth rate on record in 2025 as its population shrank for the fourth year in a row, deepening a demographic challenge (https://www.cnn.com/2026/01/01/china/china-one-child-anniversary-intl-hnk-vis-dst) that could drag on the world's second-largest economy for decades to come.
The rate fell to 5.63 births per 1,000 people in 2025, beneath 2023's low of 6.39 per 1,000, China's National Bureau of Statistics reported on Monday. The drop suggests that a slight uptick in births in 2024 was an outlier rather than a reversal of an otherwise steady decline since 2016.
The question is whether A2 can grow its market share faster than its market shrinks?
ATM is working on growing market share by introducing products aimed at the elderly
Quote from: KW on Jan 19, 2026, 04:14 PMChina (https://www.cnn.com/world/china)clocked its lowest birth rate on record in 2025 as its population shrank for the fourth year in a row, deepening a demographic challenge (https://www.cnn.com/2026/01/01/china/china-one-child-anniversary-intl-hnk-vis-dst) that could drag on the world's second-largest economy for decades to come.
The rate fell to 5.63 births per 1,000 people in 2025, beneath 2023's low of 6.39 per 1,000, China's National Bureau of Statistics reported on Monday. The drop suggests that a slight uptick in births in 2024 was an outlier rather than a reversal of an otherwise steady decline since 2016.
The question is whether A2 can grow its market share faster than its market shrinks?
Interesting.... it seems that the major infant formula product recalls by Nestle and other European Manufacturers may indeed lead to further gains in Chinese Market share for ATM.
https://www.scmp.com/news/hong-kong/health-environment/article/3341139/hong-kong-authorities-find-toxins-4-batches-milk-formula-recalled-nestle
(Disc - don't hold ATM. Have a small holding in FSF. )
Seems the love for A2 is a bit lost. I'm still holding more than my fair sahre and remain intersted in theri progress.
Heres a lazy cut and paste from yesterdays announcement
The a2 Milk Company ("the Company", "a2MC") today reported strong first half1 financial and operational results and upgraded
FY26 full year guidance.
1H26 Results2,3
1. Strong revenue and EBITDA growth with underlying4 EBITDA % margin improvement
2. Achieved Infant Milk Formula (IMF) revenue growth of 13.6%, driven by: - English label IMF growth of 20.9%, with growing contribution from a2 Genesis™ and new markets - China label IMF growth of 6.5%, achieving record market share
3. Accelerated Other Nutritionals growth of 42.9%5, through recent kids and seniors product innovation, entered paediatric
supplements category and developed new kids fortified UHT product for launch in 2H26
4. Delivered strong growth in Liquid Milk of 18.5%, driven by core products and lactose free and grassfed innovations
5. Advanced supply chain transformation with completion of a2 Pokeno acquisition, Mataura Valley Milk divestment and
long-term Fonterra milk supply agreement – enabling a2MC to build a higher growth, more profitable and lower risk
end-to-end-business. Key transformation streams, including the China label registration amendment process and a2
Pokeno facility and capability upgrades are on track
6. Upgraded FY26 outlook driven by strong performance across all segments and products
Key financials and FY26 outlook2,3,6
• Revenue up 18.8% to $993.5 million, driven by strong performance across all segments and products, with growth
primarily from core products supported by recent innovation and slightly benefiting from FX and a2 Pokeno sales
• China & Other Asia segment revenue up 20.3%, ANZ up 8.6% and USA up 29.0%
• EBITDA up 18.4% to $155.0 million, with underlying4 EBITDA up 25.9%
• EBITDA % margin of 15.6% consistent with prior year, with underlying4 EBITDA % margin of 16.6% up 0.9ppts
• Net profit after tax (NPAT) up 9.4% to $112.1 million, with underlying4 NPAT up 19.6%
• Basic earnings per share (EPS) up 9.2% to 15.5 cents, with underlying4 EPS up 19.4% to 16.9 cents
• Closing cash of $896.9 million, with operating cash conversion of 90.8%7
• Interim dividend of 11.5 cents per share declared, unimputed and fully franked (~74% NPAT payout)
• FY26 revenue growth guidance increased from low double-digit8 percent to mid double-digit8 percent with improved
EBITDA % margin range expected (see full FY26 Outlook in the "1H26 Interim Results Commentary and Outlook"
announcement)
Global disruptions and local production not up to scratch = PROFIT DOWNGRADE
Not surprising
https://announcements.nzx.com/attachment/466323.pdf
Quote from: winner (n) on Apr 13, 2026, 09:01 AMGlobal disruptions and local production not up to scratch = PROFIT DOWNGRADE
Not surprising
https://announcements.nzx.com/attachment/466323.pdf
Oh dear - revenues growing slower, earnings dropping, so called one-off costs but on the other hand - risks are rising. Isn't this what markets love?
Quote from: winner (n) on Apr 13, 2026, 09:01 AMGlobal disruptions and local production not up to scratch = PROFIT DOWNGRADE
Not surprising
https://announcements.nzx.com/attachment/466323.pdf
Sounds to me like China is up to its old tricks. Increase regulatory scrutiny, testing requirements, customs delays - all designed to put the brakes on imported product and redirect consumers to buy domestically produced product. Especially since the number of Chinese babies is the lowest on record. Got to absorb that Chinese made formula somehow.
Quote from: KW on Apr 13, 2026, 03:37 PMSounds to me like China is up to its old tricks. Increase regulatory scrutiny, testing requirements, customs delays - all designed to put the brakes on imported product and redirect consumers to buy domestically produced product. Especially since the number of Chinese babies is the lowest on record. Got to absorb that Chinese made formula somehow.
I guess that's just the problem if you decide to make one of the superpowers your nost significant market. No reason to complain about a superpower doing what superpowers seem to be allowed to do. I guess - at least do the Chinese not bomb innocent people in foreign countries, as e.g. Trump and Putin love to.
Clearly - A2 is basically just living off one single market (well, ingood times) - without ever having properly understood the market and the risks. Sure - they put lots of effort into pointlessly maximising the CEO's salary instead of establishing a well managed company with sensible risk management. The point is not about the Chinese, it is just a dumb and incompetent board blindly stumbling from one risk to the next and adding some more issues themselves.