ATM-A2 MILK

[Left Field]

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......"

[Left Field]

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.

[Basil]

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.

[KW]

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.

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"

[winner (n)]

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"

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

[KW]

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

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.

[kasper]

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.

Umm the shares bought back are being cancelled by the way.

[winner (n)]

Seems market not that keen on that veiled downgrade today

[KW]

Seems 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

[Basil]

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 ?

[winner (n)]

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

[winner (n)]

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.

[winner (n)]

 Ukraine affecting sunflower oil production

An impending problem for A2

[BlackPeter]

Ukraine affecting sunflower oil production

An impending problem for A2

I didn't realise they are milking sunflowers. Are they?

[winner (n)]

I didn't realise they are milking sunflowers. Are they?

Apparently a key ingredient in infant formula