I thought the exact same thing. How long will they remain speculative......... when they make half a billion dollars in profits?
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Imo when growth rates down to the teens or single digit numbers and the p/e comes back down. And you are correct that this could be when they have grown to have a half billion profit and market cap a bit over $10b. The p/e would then be slightly over 20.
Till then there is a lot of speculation in the share price that rapid growth will be achieved. Probably well justified speculation, but still speculation.
A good stock can be speculative at a particular price.
:cool:
Aussie are paying a 20c NZ premium at the mo the sp is $10.52 over there,is this a good guide to the price going up over here?
https://www.9news.com.au/2018/10/23/...instate-limits
And still they keep on buying!
"A2 has also doubled production of its premium formula, but that's not enough to meet supply."
What a great problem to have and solve. With Synlait rapidly boosting production and the agreement with Fonterror (unknown quantity), the supply side should catch up to the demand, but not in time for Singles Day 11 November. No doubt that A2 is the premium brand.
Should be a fun update from ATM in November. I reckon the Jayne / Directors selling effect is worth about 20% discount to SP and should burn off to previous highs when results announced shortly.
Could say this recent period has been a great buying opportunity. Even Moaningstar (cough) reckon it's 'accumulate' target SP in the $14's. They could be right for once, lol.
If they are right in due course that's all the proof you'll ever need that every dog has its day :)
Of course you are referring to Moaningstar as the dog, who might have its day? Not ATM pe se.
I reckon this is one of the very few shares on NZX that have such a stellar growth niche that while it will fluctuate with the broader market and its internal vagaries, and no doubt it is volatile, it has extremely large growth potential. It could defy the market in the medium to longer term in spite of a even a broad correction and emerge as a value/growth play that one wonders in due course why they missed the buying opportunities presented.
JMHO, it's still very speculative despite a 10+ bagger for the earlies. But so have been a few other companies that enjoy having accidental millionaires as their minority shareholders.
Worthy of a modest portion of any portfolio Imo.
Latest from Prof Woodford...
https://www.interest.co.nz/rural-new...acting-a2-milk
The below sums up article in a nutshell..
"A2 dairy products are now mainstreaming on a global platform. In marketing parlance, A2 is becoming an industry disruptor."
Just wait until mothers (especially those in China) read this :
"Professor Robert Cade from Florida – perhaps most famous as the inventor of Gatorade – established some 20 years ago that BCM7 was a respiratory depressant strongly implicated in sudden infant death syndrome in vulnerable babies. Professor Kost from Moscow showed that babies unable to quickly metabolise BCM7 were at risk of developmental delay. And for some 20 years there have been major concerns leading from Professor Elliott’s work in New Zealand that BCM7 can be a childhood trigger for Type 1 diabetes. There is also evidence that BCM7 can cause arterial inflammation. All of this is published in top-level journals."
Game over for A1 infant formula!
https://www.interest.co.nz/rural-new...will%C2%A0take
LIC already selling along of semen from A2 bulls, so the process probably already started.
Brace yourself for sector contagion as across the ditch, Bellamy's have their ASM today and their guidance was poor as per below...
"Oct 24 (Reuters) - Bellamy's Australia Ltd (BAL) expects its 2019 first-half sales to fall in a range of 10 percent to 15 percent from a year ago, Chief Executive Officer Andrew Cohen said at an annual general meeting on Wednesday.
The CEO of the infant formula maker, which still awaits a crucial permit to sell its products in Chinese stores, also sees its full year Australian label revenue growth at the lower end of its previously stated zero to 10 percent range."
"Brace yourself for sector contagion as across the ditch, Bellamy's have their ASM today and their guidance was poor as per below.."
Maybe... I think the key difference here is that Bellamy's don't yet have a permit to sell in Chinese stores. A permit A2 has through Synlait. Rightly or wrongly Jayne has been quite critical of the Bellamy's model and I think that A2's multi channel approach reduces the risk.
The impact of new ecommerce regulations will be interesting. My view is that A2 first half results will be really solid with the impact (if any) of new regulations occuring in the second half of the year.
At the moment there is a pie (milk) and sub-pie (A2 milk).
ATM have a significant piece of the A2 milk pie but are really small players in the milk pie - and that is the only pie that there would be.
Their differentiator would be gone.
May be a wee ways away but likely to happen.
I understand way back when A2 was the normal milk and A1 came about as a mutation that seemed to become the prevalent type.
I know nothing about shorters, rightly or wrongly. Im 30 and hold investments with retirement in mind so I'm not too worried by the volatility created by traders. I see the main risk to A2 share price in the near term is wider sharemarket PE retraction which will hit higher growth stocks more heavily and or recession due to global factors (brexit/tradewars). Over time Im comfortable with my holding size and will only exit if dynamics for A2 change. These could be competition, IP loss, regulation changes etc.
But by then they wouldn't necessarily need a differentiator.
As everyone is slowly moving to make A2 milk pies alongside their normal pies - they massively boost awareness and promotion of the a2 milk pie.
ATM are ready to benefit from this from being significantly ahead of everyone else. So although they start to share the a2 milk pie, the pie is getting larger by the year.
By the time there are no normal pies being made ATM's market share could be massive.
You're on track. It's about time in the market, not short term timing the market with this gem.
I've been in ATM since 2014 and have seen shorters come and go. I've seen fearsome comparisons to BAL come and go. Fears of China regulation come and go etc..
The big picture is that in FY18 ATM sales grew 68% to $923 mill. Net P was up 116% to $196 mill and Cash on Hand was up 131% to $231 mill.
For FY19 if revenue increases at a slower pace (say) 40% ATM's revenue could reach $1.3 b, Net P and Cash on Hand could double. (DYOR) There are few other NZX companies that offer this potential.
The next update will provide info to assess progress to these goals, and until then all else is just speculation.
I think in the future, you will only be able to buy a2 milk, but not from atm necessarily.
Notice of AGM, chance for shareholders to vote for the Directors and a big fat 50% increase in non-exec director fees. https://www.nzx.com/announcements/325724
Plus voting I also will be exercising my right to ask questions, particularly those who hocked off their shares.
SML update up to 25% increase in IF production FY19.
http://nzx-prod-s7fsd7f98s.s3-websit...749/289155.pdf
Hopefully when the Aussie opens, the SP will get mauled.
You've hit the nail on the head in terms of the important role of shorters in a market.
Shorters actually add liquidity to a market; to de-risk and take profits they need to buy back the stock, providing a counterbalance to a selling wave which is initiated and maintained by liquidating longs. Ironically shorters can actually help to prevent price undershoots, although many will actually find that concept counterintuitive.
Unless a participant believes A2 is worth zero (i.e. fraud), they will have a price target where the risk/reward of staying short doesn't make sense. Whatever that point is, it means that there is some fundamental floor under the share price where there will be a mass buyback of short positions. Which then puts the onus back on the longs to put their money where their mouth is, and move the price upwards again via organic demand. That's the beauty of a free and competitive market.
I quite enjoy the shorters causing so much volatility. Got another bargain purchase this morning and will be looking for more in the future.
The shorters could be in for a shock when many longtermers purchase at these very attractive prices. Lower supply for them to cover just means a bigger squeeze.
As always buying with steady hands for the longterm at good prices is always a recipe for good results
Just did my voting for AGM online. Voted against all current directors up for re election.
The larger the company the less the need for a CEO to be a Director. She has shown a lack of foresight with the sale of 100% of her shares which ought to put her CEO job at risk. This instantly disqualifies her for consideration for a Board position. The money aside (how big a deck has she got) she should not need a Director role - she should recognize her CEO role should consume 100% of her business attention. If she has spare time she should take a pro-rata drop in CEO rem.
I stand corrected, but I am pretty sure it was stated a couple of days ago in an AGM resolution to the market/shareholders for the forthcoming AGM that the Trougher has the full backing of all current Board members in seeking election to the Board as a Director. If passed, she will be a Managing Director and CEO.
Question for the agm. Is the CEO role a full or part time position?
I stand somewhat corrected from my previous post:
A quote from the ATM website: "Jayne commenced as Managing Director and CEO of the Company on 16 July 2018."
So she is currently an MD and CEO but is seeking re-election (???) as an MD at the next AGM.
As already stated: she has the full support of the current Board members for this.
She is also currently a non-executive President of Tennis Australia.
Minor holder, voted.
Yes to freeze fee and no to all. Won’t make a difference as minor holder but this is all i can do.
Well, its definitely questionable governance. Given that the CEO reports to the board it means Ms Hrdlicka is reprorting basically into herself. I can see how this leads to very bad decisions (not for the board, but for the sharheholders). Its like using a fox (or ferret in the NZ context) to watch over your hen house ...
Greenslade of Heartland is one example of CEO also being a Director. Many others
Doesn’t seem to cause any angst
Well, yes - that's what they always say.
In practise is it already difficult enough for a board to control a CEO who is not part of it. CEO (working full time in the business) will always have more and fresher information about said business. Board members are only working part time (for that paticular organisation) and, given that they hired the CEO in the first place have as well some emotional attachment following him/her (confirmation bias). Been there, seen that.
Having the Exec on the board just makes it harder. Obviously - it all depends on the personality of the CEO and there are exceptions, but in general does the NZSA not recommend to have the CEO as well on the board - and they should know.
Lewis Gardon of Fisher and Paykel Healthcare is one example of CEO also being a Director. Many other examples
Doesn’t seem to cause any angst
The fact that it does work in some cases does not mean it is a good idea to do so.
Many drivers used to dodge using a seat belt and most of them survived driving their car without buckling up. This fact is however no evidence, that it is a good idea not to use a seatbelt. Ask the ones who died :p;
If the lights flickered at A2 HQ, then that was because I just voted against on all on principle.
That should have them shaking in their boots (not)
I think in practicality, most CEO's need to sit in on the board meetings to provide information, perspective and context to proceedings, and more of the granular detail - that the board doesn't have. Not being on the board allows the board to then remove the CEO from any particular discussion as it wishes.
I don't think it really matters, but may mean that a seat is taken by the CEO whereas could have another on the board which may offer different perspective and expertise.
I've voted in favour. (I'm not a Jane knocker. Way too early to judge her performance IMO)
Her timing is impeccable. Much kudos lol
Nah I think it was a bit rich, but aren't we all in this for making money, which includes not losing it - so, a big round of applause - didnt she do well. Now do something equally clever for shareholders.
I hadnt really thought about the pro's/cons of duplicating roles CEO/BM as per the recent posts.
The best people in the best places where they can have the most influence is surely the idea. So if she's that good ?
It's an interesting debate. I think in the US you will find many CEO's are also the Chairman of the company (TSLA for example, well not anymore but that is another story) but I think the NZ model where the CEO is removed from the board makes more sense and is structurally better for governance.
I'm a bit of a simpleton and I see the director's role as governance and strategy in the interest of the owners / shareholders. The CEO is responsible for implementing the strategy at operational level.
If CEO fails in implementation how can the board have a conversation with CEO when CEO is part of the Club.
Yes and Simonn Challies / Gordon Macloud of Ryman.
I agree with winner on this. Have seen lots of examples of CEO sitting on the board with great results. Everyone and every organisation is different. They can organise however works best for them for all I care. All that matters to me is quality of management and whether I can trust them and the results they achieve. How they choose to make the magic happen is up to them.
I think I will be voting yes to all meeting resolutions except the increase in fees for which I will vote no.
I wouldn't compare Herd Licker and Simon Challies, Simon is a legend for all the right reasons where as the other one, well no.
I wasn’t trying to compare them but you’re right. Definitely a pretty massive gap between the two.
A2 really needs to put a higher focus on growing their own talent. I’m not a fan of these highly paid outsiders. Rarely have I seen good value for money outcomes compared to promotion and development of inside talent.
Definitely would agree with that. And maybe Mr Babbage was not such an outstanding leader as everybody seems to think? While he did clearly a pristine job in growing a startup into an enormous company - he obviously failed in growing and fostering inside the company the talent which the company now desperately would have required to replace him.
No leader is really great if they don't have as well a good succession plan.
This is what teh NZ Institute of Directors says, and they ought to know:
"Separating ownership from control
It's easy to get confused with the difference between governance and management. The board is in charge of governance of a company which seeks to ensure the smooth running of a business by making accountability and oversight the core of their workings. Governance also ensures that the business has a future-facing strategic plan.
This is where management comes in. They take the strategic plan and work to implement it into the day-to-day operations of the company.
Both roles are vital and complementary.
The difference can get blurred with SME's when:
- there are only one or two directors
- the same directors are founders
- these directors also manage the day-to-day operations.
Which hat to wear?
Executive directors need to think about the hat they have on:
- for operational aspects an executive director wears the management hat
- for board meetings, an executive director will need to switch to the more strategic cap (ie governance).
This is where an independent director can help guide your board discussion, and make this delineation clearer."
Mini - from that bit you quoted from NZIM — Governance also ensures that the business has a future-facing strategic plan.
Betcha Boards don’t generally develop that strategic plan — they should provide insights etc in its development — as it says their governance role is to ensure a strategic plan exists (review, challenging and signing it off)
Thats becasue the Board should be deve;loping it and then making sure it is being implemented. Thats what Board reports do - the operational reporting against strategy and compliance etc
You might be right - but doesnt make it right. Company employees from CEO down are operational management with authorities originally delegated by teh Board.
Thats what a Board gets paid for - using their skill and experience to develop a plan. A different set of skills for an operations CEO / Management. Of course the CEO will be one source of advice to the Board. Look at the money Boards receive as Rem - they dont get that for just sitting in a meeting for a few hours once every few months if they can be bothered turning up. Remember - they are the Owners / Shareholders representatives - they are there to figure out the long term strategy. If the Owners dont like the strategy being developed or the Boards governance / oversight in getting the strategy done the Board is at risk of loosing the trough.
Mr Woodford's latest article re A2
https://issuu.com/farmersweeklynz/do...68707/65384671
Page 26
Be still my beating heart. ATM above $10.00
Seen the amount of ATM shorted? Over 5% of the issued capital.
Going to have to be some aggressive short covering if markets turn even slightly positive!
The last time >5% of ATM shorted was in Feb 2017 and the shorters were burnt something horrible as ATM as the sp doubled and doubled again before they covered their shorts!
Now it’s roaring on the ASX
9 news did a good coverage today of the IF frenzy going on, focused on A2:
https://www.9news.com.au/national/20...g-for-formula#
Spot the squeeze (1 minute chart today)? Smell of burning shorts in the air. Lol. Cool to have some levity after an otherwise rather disappointing few weeks coinciding with the globals getting the jitters. Anyway, there's been some cracker buying opportunities imho and notwithstanding a further rout on the big bourses tonight, we might see ATM playing catch up tomorrow. Would be nice to see A2M continue the rush.
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