ATM-A2 MILK

[BlackPeter]

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

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!

[CG]

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!

In my younger years one professor taught me - never argue with intellectually disadvantaged people. So, whatever pal.

[BlackPeter]

In 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 ;

[Teitei]

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!

[Hectorplains]

"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.

[Whome]

"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.

[winner (n)]

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)."

[Hectorplains]

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.

That's a good point about the melamine tragedy...A2 undoubtedly benefited from that ill wind.  As to the US, Stats NZ 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.

[Basil]

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.

[Breezy]

"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.

[Sideshow Bob]

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.

[Minimoke]

Market seems to be anticipating a positive announcement on the 19 Feb. SP up to 5.16

[Breezy]

Market 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.

[Minimoke]

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

[Left Field]

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.