ATM-A2 MILK

[Buzz]

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.'

Thanks, but don't have access to NBR. What was the rationale that leads them to say "in a strong position"?

[winner (n)]

Thanks, 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

[Buzz]

Basically 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.

[Left Field]

What? 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."

[Crackity]

What? 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.

[Left Field]

Interesting development as Fonterra puts its consumer brands such as Anchor up for sale....

https://www.nzx.com/announcements/431158

[Left Field]

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

[Minimoke]

Interesting 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.

[Left Field]

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.

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.

[mfd]

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?

[Minimoke]

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?

Whatever the plan market seems to like it. First time in ages there been a 5% rise in a day.

[Buzz]

Whatever 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

[Minimoke]

A2M charging ahead. At this rate  its going to get a speeding ticket.

[Left Field]

A2M 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

[Minimoke]

Whatever 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