Your onto it.
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Internal testes - but balls of steel nevertheless!
Looks like A2M and BAL prices are going to criss-cross soon at the ASX...Shorters on a rampage...
TA is very shaky as well, vulnerable to any further SP weakness, albeit massive support technically just a smidge below here.
One should expect the motivated sellers (shorts) to go hard on A2M and see if they can break down the high 12’s support hoping to create a capitulation event.
On the flip side, committed buyers, accumulators and others looking to capitalise on SP weakness will be counting their dry powder looking for a Best Buy price.
Greens call for scrutiny of possible 'manipulation' in $1.5bn China milk bid
Greens Senator Peter Whish-Wilson has urged the government to examine if the Chinese government suppressed the shareprice of infant formula company Bellamy's, ahead of a Chinese corporation's $1.5 billion takeover bid.
https://www.theage.com.au/business/c...17-p52s72.html
Meanwhile, analysts from a Hong Kong firm believe the proposed takeover by Mengniu would "speed up" the Australian infant formula company's much-needed regulatory approval.
The Huatai Financial Holdings analysts painted the deal as a good fit for Mengniu, adding that Bellamy's was superior to another business that Mengniu had sold.
"Bellamy's has better growth potential than Junlebao as Mengniu will help the brand to accelerate infant milk formula registration and channel expansion in China," they wrote.
https://www.theage.com.au/business/c...17-p52s72.html
Looks like this deal is no cake-walk given that the greens are involved.. I can draw a parallel with an open cast coal mine investment by a group named Adani from India in Queensland and this dragged for at least four years with protests organized and litigations etc.(Of course Coal is totally different from Milk) and even became an election issue.
https://www.theguardian.com/environm...mine-australia
Looked up Confucius sayings yesterday. Thought there must be something in there along the lines of "Man who dodges bullet very unwise to put himself directly in the firing line again" Didn't see it so best we call this a "Beagle" saying then :)
Some good other wise stuff in there nonetheless http://www.quoteambition.com/famous-confucius-quotes/
hammer time coming? bigly when the support goes i reckon.
Took me a couple of minutes to work that out yesterday...suppose you call that a senior moment lol
Nonetheless putting the vast majority of one's eggs in just one basket when there are literally tens of thousands to choose from around the globe is quite an "interesting" investment approach. There's got to be a Confucius saying in there covering that surely ?...must have another look...
Ecclesiastes 11:2 Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land. Enough said but plenty more wisdom here for anyone interested https://www.biblemoneymatters.com/bi...out-investing/
How close to the Synlait Pokeno factory to the one Megniu has an interest in?
no support today , looks like today is the breakdown barring some magic from the fed tomorrow to rally a2. not surprised really the other day was a perfect short opp megnui big competition along with nestle now and soon westland milk will be doing a2 into china i reckon so competition is inevitable when market is so juicy.
Yashili is next door at Pokeno.
Interesting the nexus between Mengnui & Danone. Mengnui is China's largest dairy company, owned by COFCO and Danone (9.9%). Yashili is owned 51% by Mengnui and 25% by Danone. Danone also has its plant inland from Balclutha & canning at Airport Oaks.
Long time till the next drinks break (AKA good news event). Singles day in November, then half year result in February 2020.
In the meantime I suppose shareholders can look forward to Ms Herdlicka selling down her stake.
Looks to me as though a great number have already beaten her to the panic button.
Sticking with my view expressed in post #13,658.
Not concerned with where analysts value it. I won't pay a cent more than $11.50. The game has changed and the massive spend on marketing is now required for much slower sales growth.
Massive amounts of future growth already priced into this one.
False alarm or the completed rebuild?
https://www.goodreturns.co.nz/articl...or+18+Sep+2019
UBS don't seem to be too bothered about their a2 holding down $154,000,000 in the last 7 weeks. A2 down 3.2Bil. Where does the FMA come into it? Or is it only when it happens over one day, that they would make an inquiry? Or do they know a2 history and turn a blind eye?:)
Jayne's take on the Bellamy takeover deal..
https://www.afr.com/companies/agricu...0190917-p52saw
Wow - somebody either really wants out or tries hard to flush out any remaining stop losses below yesterdays broken AU$13 support line ...
Attachment 10773
More than 300,000 shares for $11.34 on offer - this is quite a statement. Anybody needs some "cheap" A2M shares? Plenty on offer ... might turn into an interesting day ...
Well, I guess somebody with lots of ATM shares wants to set a signal. Whether they really want to sell (and at what price) is obviously open.
Re equities derivation day on a Thursday - which holiday do they try to avoid this time? These Ossies are clearly too much into celebrating ...
hammer time , confirms the break down i guess
heres some more on why megnui deal is big news
China is the largest baby formula market in the world. All international players are facing an even more competitive market with the government seeking to reinvest in the category. It is encouraging local companies to buy foreign dairy producers, and has set a target to be majority self-sufficient within three years.
https://www.afr.com/companies/retail...0190823-p52k5y
megnui as i said is the first step in the t/o of bellamys on there way to being self sufficient
if / when ? the price gets to $3 im sure the chinese will launch a takeover to crys of they drove the price down
I think it'll be fine next year. Only a bother to traders and people looking to exit (which is currently me, unfortunately). Otherwise, enjoy the cheaper entry prices if you want in.
Im looking forward to the next ATM news event.
Trading on a very narrow range... does it imply short covering?
Brave call, Couta and I hope it’s right.
Wish I had sold all my shares when I sold 2/3rd after the disappointing results.
Given my entry price, I am comfortable to ride with the 1/3rd left but I have to say I am not in a hurry to reset my holding higher anytime soon.
I suspect it’s short coverings as some shorters lock in gains, giving some support currently.
Thinking of selling some of my FPH to invest in more ATM
The chart is looking pretty ominous. Reversion back to test long term support at about ~ $11 is not out of the question in my opinion.
Maybe by a dollar or more. Bought some in 2 August for 1752, 12 August for 1590, 21 August 1495 and the other day for 1380 :t_down: I will chase it down farther as my overall cost is still below 4 bucks :t_up: having bought and sold heaps then when acquiring it was way below that sweet amount of 56 cents. So worry not lucky early holders :p
Oh dear - another of Jayne's Jetstar pals transferring into ATM management.
https://www.nzx.com/announcements/341408
While I don't know anything about Race do I start to wonder how Jetstar could perform so poorly under this team which is now "top cream" for ATM?
Do you believe that the current CEO's performance has been bad?
Well...yes and no...it is probably a measure of the worth of her business contacts network and the regard she is held in, by them.
Poaching the CFO of well performing Qantas looks like a pretty good hire to me. They've been pretty good at counting beans over there...
Some very good experience http://www.sharechat.co.nz/article/0...ilk-as-cfohtml
Need to count lots of beans before you learn to spot the bad and doubtful ones...no substitute for experience.
Unfortunately it takes five years (give or take a year) to really assess the performance of a CEO - and until then they typically move on.
I don't think that she did a great job at Jetstar ... and she had already a handful of slips at ATM. Sure - she is a smooth talker, but is this enough to bring this company to the next level ? I doubt it.
Somewhat concerned as well about the huge blowout of senior positions under her reign. You need a small team of top performers to run a high performance company, not lots of average people ...
If Jetstar really had this unique combination of top people in their leadership ranks, than I find it hard to understand why they are such an underperformer.
Agree 100%. Gargantuan increase in spending on marketing too going forward. Very very different approach to Geoffrey Babbage. Jayne says all the low hanging easy fruit has already been picked or words to that effect. A cynic might suggest you can usually mark out underperformers when they pre-prepare their excuses for lower future growth.
Huge growth in revenue and market share still on the cards and sustainable, flat NPAT growth while investing in marketing and company capability ... have to invest in the future when the easy pickings are tailing off and the hard yards ahead of growing a circa $10 billion company into a $100 billion.
Geoffrey did a good job for sure, but it's time to let the new management team get on with preparing for the future, which looks very bright indeed. Lucky you have a share of the action in your KFL fundy, so you won't miss out on the good times ahead.
Good to see Pokeno come online today as well, get that China certification and with the exclusive ATM supply agreement, all good, though I see you're still down on that as well.
There are other real train wrecks to ogle at and be cynical about, ATM isn't one of them imho ;)
Time will tell with ATM...my sense is its had such a massive run over the years a really large amount of the future growth is already priced in but that was a good CFO hire today and a good CFO can make a huge difference...
Long term investors should do okay in the long term.
Another analyst bullish on ATM's potential, forecasting av SP gain of 33% pa for next 5 yrs to $A33.66 in 2024.
read it here
As always DYOR.
No one is congratulating the shorters. They have done a tremendous job at keeping the price from increasing. Well done shorters
Some "interesting" conceptual computer modelling for sure. How much real analysis and thought is behind it is anyone's guess.
For me the lack of foreseeable future growth through the daigou, (or however its spelt) channel and commentary from the company that future growth will depend upon direct market penetration marks a step change in the business model. What it means to me is that future growth will be vastly more expensive to achieve than simply picking the low hanging fruit.
This gargantuan ramp up in marketing and fortification of management infrastructure to support future growth plans are costs that simply will not dissipate going forward and really suck the wind out of the growth sails of this company. Future eps growth in the low - mid teens at vast cost is massively different from the low hanging fruit picking and vastly higher rates of growth achievable in the past and at least in my mind this absolutely MUST must be associated with a step change in the forward multiples attributable to this company. Forward multiples slightly north of 30 made sense before when the sales and eps growth rate was much higher but not anymore.
For this to be an attractive opportunity again, at least in my book it needs to be in the mid $11 range and the forward PE just under 25.
If it doesn't get there I am quite relaxed about it and I am happy to simply maintain a modest exposure through Kingfish.
I made this same call on RYM 5 years ago that the multiples were simply too high for the growth rate. RYM has materially underperformed that sector since then so I am more than happy to back my own valuation thesis.
TA looks ugly too and in my opinion those with an XXXXXL position are leaving themselves very exposed.
made a retest of the break down at around 14 just under , pulling back now which is usually bearish in my opinion as support has now become resistance. only means one thing hammer time
Apologies if this is old news, this just popped up on the SMH's markets live as I was trying to find out why my South 32 shares are doing so badly:
A2 Milk is a sell, says analysts at Citi.
“We consider consensus EBITDA margin expansion in FY21 and FY22 as too optimistic given the increased investment required to pursue growth in China and the US,” Citi equity analyst Sam Teeger said in a note released late Monday.
Having switched its rating from neutral to sell, Citi has also downgraded its price target for the company from $15.15 to $12.20.
“Our target price now implies an 18 per cent lower FY20e PE multiple of 26x as we have cut our EBITDA margins," Mr Teeger said. "The daigou channel is no longer reliable to drive growth and competition is increasing."
Shares in A2M are down 2 per cent to $12.375 on Tuesday.
https://www.smh.com.au/business/mark...24-p52u9m.html
Citi's view - Heck that's about the same as I see it, but something I clearly articulated about a month ago. $A12.20 price target 12 months from now, (assuming people expect a minimum 12% return for risk capital in the market), is almost bang on where I see fair value at present of $N.Z.11.50 now. PE multiple they use is almost identical to where I see it and I also agree that EBITDA margin expansion in FY21, FY22 and beyond is too optimistic. I would expect Jayne will continue with her extremely heavy handed approach to marketing spend and staff recruitment. This isn't even a hold as far as I am concerned at the current price and technically the chart is looking very ominous. I don't think some people have got it that once the low hanging fruit has been picked the game has fundamentally changed.
Kingfish adding to their holding in this and Vista when the game has clearly changed for both is disappointing and I am not surprised they have started to underperform the market, (actually quite sharply in August and a repeat appears to be on the cards for Sept). My faith in their stock picking ability is being sorely tested.
Take absolutely no notice whatsoever of Sam Teeger or Citi, they have played this old trick before with A2, issue a downgrade then mop up as many cheap shares as they want for their clients and to lend to shorters and then a few weeks or so later they issue an upgrade. PS-See you at $20.
Posted on 21 August 2019 when the share price was $14.81. The cautionary note was intended for my friends to consider carefully.
Took Citi over a month to work out what it took me to do in a couple of hours when time allowed. I think they've finally seen the situation for what it really is.Quote:
Was quite busy doing real work today so here is my belated detailed analysis and thoughts.
For my money Balance has a good point. Herdlicka is spending money on staff and marketing with little or no restraint and it will obviously materially affect the EBITDA margin. Only time will tell if this is a better way to grow the company than Geoffrey Babbage's more conservative approach. The considerable inventory build suggests they could have sold more if the demand was there but it wasn't. In fact demand was short of production capability by quite a bit and that's a first to the best of my recollection. Maybe that's why marketing is being seriously ramped up ?
The other thing to keep in mind is sales and profit growth, (despite all the extra staff and marketing spend in FY19) has slowed quite considerably compared to last year. Net profit after tax grew 116% last year so ~ 47% growth for FY19 is clearly not nearly as impressive.
Likewise sales growth last year was 68%, just 41% for FY19 and that with heaps more marketing and headcount.
When we look at the 1H FY 19 v 2H FY19 split we see 1H sales of $613m generating $152.7m net profit and 2H sales of $691m generating just $135m net profit and its the margins in 2H shareholders get to "enjoy" going forward.
Its looks to me like Herdlicka is throwing a heck of a lot of money at the operation and growth is slowing quite materially whereas Geoffrey Babbage's approach was far more successful. Don't suppose he can be coaxed out of retirement ? Could be a rough few days ahead as analysts seriously revise their numbers.
Cash on hand amounts to 63.2 cps.
https://www.marketscreener.com/A2-MI...22/financials/
Prior to this announcement average analyst view is for sales of $1,660m next year and 32% EBITDA margin.
Retuning this to the 28.2% EBITDA margin the company is now forecasting and everything else in the above average broker forecast for FY20 staying constant this gives revised NPAT of $326m for FY20, only 13% net profit growth next year on 27% sales growth and all this on vastly higher marketing and human resources costs.
$326m gives 44.4 cps earnings and at a closing price of $14.81 that puts ATM on a forward PE of 33.4. That looks a bit pricey to me for the expected growth rate, (has traded at lower rates in the past with much higher previous eps growth rates) and caution appears to be warranted.
Finally, no analysis is complete without a look at TA. Very clear break down through the 100 day MA today and the bounce this afternoon was fairly muted in comparison to the initial drop and did not recover above the 100 day MA.
Hmmmmm. Some real caution appears to be warranted here. All the numbers I am looking at tell me very clearly that profit growth is slowing down at quite a worrisome rate !
Disc Not holding and not intending to directly hold. Hold Kingfish and they hold heaps of ATM.
I doubt some will read or even briefly try and think about another perspective...
Perhaps those who are not familiar with the ASX and the incredible market manipulation by very large deep pocketed insto's and brokers will find it difficult to comprehend the games and whipsawing share prices, or the motivations, let alone the methods. The so called 'analysts' reports are just front running their companies buy or sell strategy at the time, always remember they want your money. It's an eye opener for sure.
Best thing a minnow can do with a stock like A2M imho is wait patiently for a low price reversal, get in and just don't sell or react to the games. Accumulate on low price reversals which will come, look at the volatility! Traders might work both sides and sell high price reversals.
In any event, listening to brokers, insto analysts and 'discussion groups' is a mugs game, it inevitably messes with your mind and you do things you wouldn't otherwise do if you had just ignored the whole lot of them and worked your own book.
A2M and ATM are in or entering the sweet spot buy zone, it's massively derisked (capital basis) and has a bright future. Now's the time people might want to consider progressively easing in, certainly not the time to freak out and sell!
But I'm just a 'discussion group' guy, so don't listen to me ... LOL. :eek2:
Good post and reminder to what's going on behind the scenes to cause the hard to understand movements of this stock. As you say work your own book or in my words follow your Gutometer and ignore all the barking coming from different directions instead be downright dogmatic in your conviction and vision for this great company and you will be rewarded for a long while yet.