I think perhaps ATM are the opposite of Comvita's "end-to-end business model". ATM don't produce the milk, don't process the milk, and don't seem to have anyone connected to the market. They are disconnected at both ends.
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don't process the milk - I presume their 19% share of Synlait doesn't count? Or their pending acquisition of 70% of Mataura Valley Milk?
don't seem to have anyone connected to the market - what does that even mean? Dedicated sales forces in Australia/ANZ - $317m 1H21, dedicated sales force China - $326m 1H21, dedicated sales force USA - $34m H121.
No, they don't currently process milk. I'd question how well they are connected to their market since they seem to have been completely blindsided by changes in their main route to market. My observation, as a holder, is that their "capital light" business model where they focus on the brand and are relatively hands-off at each end of the business, has been shown to lack resilience when things go pear-shaped. They are addressing that I think and that is IMO the right strategy even if it erodes margin and growth.
ATM's chart currently looking the best it's been for a while (since its high one year ago). :):)
Currently RSI +ve (buy signal), trend behaviour changing?, DMI triggered a buy signal. These signals are new and for the conservatives
the price breaking the $7 resistance line will be the confirmation they want. If that confirmation happens it would give odds of 70% that the share price would continue to move higher (>5% increase), including a possible (50% chance) "throwback event" to retest the old $7.00 resistance line break (second chance buy in).
Disc: still watching but getting interested. ...
Currently $6.78 up +22c
Glad you posted that Hoop.... I've been thinking the same. Couple of nice gaps on the upside too.
Disc - holding LT, happy and not adding.
Look - I think the difference between our views is that I am quite emotionally decoupled from the company. It does not make any difference to me, whether they shine or crash, but I do find them an interesting case study to learn from.
It feels that you might be quite committed - and this brings out the pink coloured glasses. Sure - the four downgrades and their ineptness to manage or understand their sales channel might be only a bad dream in a year from now, but it might be as well the start of a trend. Whatever it is - the world has clearly changed, and how well did they deal with the change last time? See.
Bad management and bad governance in my experience does not go away unless you actively do something about it.
Nothing wrong with pink coloured glasses in the right circumstances ... but for me and my money I think there are much safer bets for a reasonable return.
Why do you think ATM is a good company to invest in given all these uncertainties?
+1 Great post, well said. A forward PE of 27 is normally associated with a company with a well proven track record of growth without the major challenges you mentioned as well as many others ! In fact four years ago when it was growing REALLY strongly without all the current challenges it was on a forward PE of about 30.
I’m not emotionally attached to it. I do own some at a $7.10 average but not overly bothered as it’s a small holding. On the contrary I think some posters here are behaving like they’ve been burned and want it to go to $2-3 to validate that they got out etc.
As I said at $6.50 given the growth they showed 2016-2020 and what’s happened I don’t think a “strong recovery” is priced in at all. Do you seriously think if a strong recovery in sales takes place over the next 6-12 months the share price will be around $6.50 because that’s all I was responding to from Beagle. Each to their own obviously but a strong recovery imho will see a much higher share price.
No guarantees of course as I said earlier.
Average analyst projection is for 13% sales recovery in FY22 ($1,385m) and 16% in FY23 ($1,608m).
On top of that and more importantly they are forecasting EBITDA margin to improve from 11.65% this year to 19.7% in FY22 and 22.6% in FY23.
I think in tandem with the margin recovery most people would describe the above as a "strong" recovery and that's already baked into average expectations.
Only time will tell how much marketing spend ATM will need to incur to firstly stem market share losses and secondly build back to growth again but its very hard to turn a brand around and seldom cheap or quick.
If the Chinese Communist party keeps extoling the virtues of buying Chinese made the task ahead could be extremely challenging and one I wouldn't bet on with management's clearly displayed ineptitude. ATM's dependence on the Chinese market and the current hostile geopolitical situation are also front and central with my assessment of the challenges ATM faces and that's before we consider freight headwinds and antiquated inventory and reporting systems.
I have no axe to grind and no position either long or short...just calling it as I see it. To me with the downtrend still in place and challenging metrics and clear risks my dog's nose for a feed, (which is seldom wrong), says go chase rabbits elsewhere, this is too hard and slim pickings.
From China 618 mid-year sales festival, we can see A2 sales rank at No.4(last year was No.5). But hey the top three(Aptamil, Friso, Firmus) have broad range of IF products sale in China. If ranking "A2 only" IF sales, I'm pretty sure A2 will easily go on No.1.
So A2 IF is still one of the most popular brands in China. No worries:)
http://pdf.dfcfw.com/pdf/H3_AP201909171361731160_1.pdf
This MVM acquisition is starting to make a lot of sense. I’m picking a strategic acquisition by a large Multinational July-Sep.
https://pillarsofwallstreet.com/wp-c...-for-2.15B.pdf
I'm just a newbie, and I rely on the computerised analysis of shares on websites.
Here's what they tell me about A2 Milk.
Website . . . . . . Av. value . . . . . . Advice . . . . . . Revenue growth
Yahoo . . . . . . .12.80 . . . . . . . Buy/hold
Reuters. . . . . . . . . . . . . . . . . . .Hold/sell . . . . . . in past -18%
Share Clarity. . . 10.02
SimplyWall.St . . 18.13 . . . . . . . . .. . .. . . . . . . . future +22.2%
Are there other (better?) websites that give information about NZ shares? These all sound very optimistic about ATM, but SimplyWallSt gives wildly optimistic valuations for lots of companies, and I've been bitten by buying A2 before, and SimplyWallSt also tells me that Colonial Motors, Hallensteins, Briscoes, Seeka, Skelerup, Marlin, the Warehouse and Wrightsons are all better value than A2, are more stable, and actually pay dividends, so I think I'll stick with some of them.
Jiggs try https://www.marketscreener.com/
You mean you want to turn this into the cheerleaders thread? No facts, please and definitely no critical posts. Only direction for any share is upwards - right? Please only say things if they sound nice and fluffy ...
Thank you, but NO - Thank You. You might want to write nice and fluffy and cheerful posts ignoring reality to yourself, then you can catch and indulge as many dreams as you like :p - but please, don't interfere with a useful discussion on a public forum.
Obviously - you cold contribute, though ... why do you think an investment in ATM is at this time a good idea? How do you see the risks and potential rewards based on the companies fundamentals?
Let's apply some technical analysis and see where we are at, what to be looking for and what the most likely scenarios are.
Monthly Chart: Attachment 12665
- Strong monthly downtrend
- Drop of ~75% from the peak
- No monthly low has yet been set (i.e. no monthly candle breaking above the peak of the previous one)
- Volume has climaxed the last two months, indicating large distribution
- Monthly RSI touched oversold
We can expect at some point that the monthly low will be set (monthly candle breaking above the peak of the previous one). We are setting up for this well at the end of this month, however ATM is a strong bear so we should not be trying to preempt this. If it does happen, after a drop of this size the most likely scenario is a monthly lower high. It would still be a potential monthly bear flag if it topped at anything below AU$10.50, so there's a huge range it can run and still be long term bearish. This must be kept in the back of your mind.
Weekly Chart: Attachment 12666
- We are still in a weekly downtrend (i.e. no weekly higher low and then higher high set)
- Weekly RSI has been massively oversold
- We are still below the weekly 12EMA (bearish)
This is the most important chart if you're looking for longer term entries. Based on the monthly chart, we know to be looking for that monthly bounce (to form a monthly lower high) at some point. For this to happen and have any follow through we ideally need to see the weekly trend change happen. At around current prices (AU$6.35) we are still a potentially weekly bear flag, so this doesn't present a good opportunity for entry at current levels. The bounce on weekly means little to me until we get that weekly trend change.
There are three scenarios to look for:
1. We set a weekly lower high at current prices and drop back and through previous lows to created another weekly bear flag (this has happened every other time. Traders will be looking for shorts around current levels (based on shorter timeframe charts) for this scenario to play out.
2. We set a weekly lower high at current levels, drop back down towards previous lows, however manage to set a weekly lower high, giving potential for a weekly trend change. The odds of this are significantly reduced if the weekly bounce tops in bear flag territory. In terms of actionable information, one looks to purchase on that weekly higher low and sets a stop below the previous low. This creates the ideal risk/reward position.
3. We rally higher ($AU6.85+) and then pull back to form that weekly higher low. If we rally to that level then we know odds are on to set a weekly higher low. So again, you are looking to buy the weekly higher low with a stop below. Near maximum potential reward, minimum potential risk.
Buying this weekly bounce right now for the longer term is a losing strategy. If you want evidence just look at all of the previous bounces.
Daily Chart: Attachment 12667
- We are in a daily uptrend (higher highs, higher lows). Remember that this means nothing in the big picture.
- We are in an uptrending channel
- We have resistance at AU$6.47 from a previous high. We should expect strong resistance in this area as it coincides with the top of the uptrending channel. Shorts will be looking to short this.
- We have a gap to fill around AU$6.85-7.00. Again if this does fill, expect heavy shorting to set that weekly lower high
At this point the daily chart is not useful for those looking to establish longer term positions. Shorter term traders will be looking for quick scalps if we get the gap fill, but at this point the shorters will be getting interested, with a weekly lower high being confirmed if we ideally get a daily down trend. There is heaps of trading opportunity on the daily and lower timeframe charts.
TLDR: unless you are a short term trader, look for that weekly higher low to be set before potential entry. If we the weekly higher low is set at the current level, be aware that there is a good chance we can drop to even lower lows. There's also risk that that if we get a weekly trend change, we may just form a monthly bear flag (fundamentals should determine this). Set yourself up in good risk/reward positions and be okay stopping out if it doesn't go your away.
I should also note that any entry comes with great risk due to fundamentals. Until the company provides further trading and strategy updates there is huge risk of gap up or downs. You can bet big money is monitoring this closely so we will likely see it in the charts before any formal update.
Happy to answer any questions or expand on concepts.