Call me a sceptic but when I see a reasonable amount of selling pressure a few days before results are published it usually indicates some bad news being leaked out somewhere.
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Call me a sceptic but when I see a reasonable amount of selling pressure a few days before results are published it usually indicates some bad news being leaked out somewhere.
Try a YTD correlation with XRO, much of the NZX Scitech sector has been dragged down by XRO performance or lack thereof. I’m not sure ATM really belong within the Scitech now that the product is more accepted as mainstream dairy, however, such short term moves often offer investors buying opportunities Harrie, what does your fundamental research and your DCF tell you.
Just a quick look at the chart on Stocknessmonster shows the 10 day and 30 day MA's crossing upwards, breaking a medium term downtrend.
http://www.stocknessmonster.com/
Like you MAC, I work purely on fundamental analysis, however this can only be based on information at hand. At the moment we have no quantifiable results only supposition and anecdotal evidence. I'm there because I believe that A2 will continue to grow market share, however these are the possible risks I see in the short term which is probably driving the perception that the A2 price got way ahead of its self in the $0.90's
1. Lion temporarily took a hit out of A2 with misleading advertising
2. The UK market has not really fired
3. The Chinese market has only just got underway but its probably been costly and unproven.
4. Nothing is happening in the US market of any great significance
5. Revenue growth in Aussy and market share could be optimistically portrayed although the CEO has been making optimistic overtures on growth there.
6. The trustees of Milford have probably given the management a wrap over the knuckles for such a high exposure to a relatively small company by capitalisation and told them to pull their head in?
By the way MAC, I value your input, you have a pretty good hold on things and an intimate knowledge of the company and its business.
I'm wondering how associated you are with it other than being a simple investor?
Happy to disclose for you Harrie since you did ask, I’m a humble shareholder of the A2 Milk Company, I’ve been researching the company for around two years and have been a holder for a similar duration. I like to compare notes with others some of which never makes this thread, there are some folk that don’t like to share information with undeserving knockers. I travelled to Auckland for the last AGM and was lucky in meeting a couple of people with a similar interest in both FA and the company. No other association whatsoever.
I find Brian Gaynor and the Milford analysts to be generally reasonably informed and I am long term fairly bullish also. At the end of the day it’s best to DYOR, although I do believe buying by some selected institutions does offer corroboration, David Mair buying also a good sign, don’t you think ?
Thanks MAC, but as I said I didn't expect an answer actually, but thanks for giving one anyway.
Do you have any view on why the SP has fallen by around 35% from its high?
Given that the shareholding among the top 50 shareholders does not appear to have changed, I can only suspect that this has happened with the shorter term traders taking profits, or maybe a few stop losses have been triggered. Its not a particularity liquid share so small volume can obviously move price reasonably widely.
There also seems to have been a trend recently to move to dividend paying stocks possibly as a defensive move as the market hit new highs.
There does not appear as far as we know any change in the ATM's fundamentals.
I'm a long term investor so probably not the right person to ask, volatility doesn't always need a reason often only sentiment or correlations. Stock picking wins out at the end of the day, always has for me at least, Ben has it right;
Graham wrote that the owner of equity stocks should regard them first and foremost as conferring part ownership of a business. With that perspective in mind, the stock owner should not be too concerned with erratic fluctuations in stock prices, since in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine.
8,000,000 just went through.
Yes some one has faith and someone is taking profit or loss. Let's hope it's no someone with inside info selling.
Harrie and others
I too am a longterm ATM investor who relies on fundamental analysis and doesn’t either understand or feel a need for TA. Like MAC I am not worried by the short term downturn in the SP.
I bought up quite big when the A2M share price was ranging between about 4c and 16c because from my reading I was absolutely certain the science behind A2 was correct and incontrovertible, and sooner or later it would be proved so.
There aren’t many investor forums fortunate enough to have a Bible. Any serious investor in ATM needs to read and have a copy of Keith Woodford’s book “Devil in the Milk”. It explains in layman’s terms the history and science behind the A1-A2 dispute, and really is the Bible. Get the second edition, which has updates on the scientific research. What’s remarkable about it is that the “scientists” (and there aren’t many) who try to dispute the A2 hypothesis have not, to my knowledge, succeeded in finding any fault at all in Woodford’s book. It stands undisputed, and it’s a good read.
It’s clear from my reading of this thread that a lot of members have not read the book. They should, before they start criticising the company’s strategy or – worse still – suggesting the science behind A2 isn’t sound.
So first there’s the book. Second, there’s Woodford’s blogsite <http://keithwoodford.wordpress.com/feed/> where he posts frequent updates on new scientific trials examining the A2 hypothesis. Again he explains them in language we can all understand. And the interesting thing here is that although there’s stacks of research being done round the world, none of it is CONTRADICTING the basic theory behind A2. It’s all pointing in the same direction, that A1 is harmful - even demonstrating links between A1 and autism and SIDS for example. A few days ago he posted on his website and on the NZ Farmer website and in the Sunday Star Times an article under the heading "A1 beta-casein a threat to dairy industry". Now you'd think that if Fonterra or Dairy NZ had factual material to respond to a headline like that, they'd have done so by now. But to my knowledge they haven't. Because they can't.
And finally, the Australian media are carrying lots of stories about the A1-A2 debate. So a google alert should bring up plenty of anecdotal accounts of consumers finding benefits from switching to A2. And interestingly, the mainstream dairy industry (eg Dairy Australia and the Australian Food Safety Authority) have virtually given up trying to dispute these things, except by trotting out the conclusions of reports written at least six years ago when there was far less clinical scientific proof of the A2 case, saying there still isn’t “absolute proof”. They’ll be saying this till the cows come home.
could be last bulk selling before report come out this thursday, and buyer think at this price is de-risk.
Wow that's a big call by both parties
According to post 1603 from Joshuatree, that can only be any one of the top 3 holders, although the NZ central securities depository probably contains a number of fund managers.
At a cost of over $5 mio the buyer would probably be a fund manager either already in there or a new enrant into the a2 story currently very short on the stock.
Be interesting to see a new chart (just for interest)
A nice surprise. Ive just found a contract note from Craigs which came thru @ 8 pm, my low buy of 63c got hit mmmh so will ask broker tomorrow about where the other 99 plus % went..
OK here is a theory
News has got out that the FY14 results are likely to show growth numbers but not as good as what was hoped for.
Some broker becomes impatient and needs to take some brokerage, so looks at exiting and moving on to something like a SPK which is showing a future growth path and increasing dividends. Easy story to sell to punters or the less informed.
Buyer becomes aware of long term advantages, has done research into future demand for milk, and adds the bonus of evidence coming through scientifically for A2, Most likely a Kiwisaver fund, and negotiates a bargain price of 0.63. Both are as happy as sandboys
I had a buy at 64 and its still there....must be only Craigs clients.....still bit worried about amount going thru and the downward trend in sp....maybe gonna ask for more money to expand me thinks..Milford havent updated lately so they may have stopped buying
If thats the case, then this time it is hoped that all shareholders are offered any rights issue at a discounted price to market..
It's possibly just as likely IMO that we may see takeover talk if they do want significant capital to go big in the US, given the competitive and marketing position the company has, there may probably be a good demand too, particularly with the SP being so far undervalued.
They all really do want some A2.
Would have to be a pretty good offer MAC , but who would be the likely offeror contenders for ATM at the moment?
Well who knows, there's a trend in Chinese companies wishing to buy out primary NZ suppliers, there's M&A consolidation happening in the Australian dairy industry plus the competitive symptoms toward ATM showing over there, but more likely from the US I reckon at a time when ATM have a raised prospective entry awareness and may require bulk funding from somewhere to execute.
Those big US dairy companies must be looking at the 9% market share gobbled up by ATM in a falling Australian dairy market and within just a few years, and perhaps may want a chunk of potential similar action when it comes to their back door.
Is the price right, may find out a little more tomorrow along with the rest of us
Crikey MAC you sure know how to stimulate enthusiasm for this stock!
Roll on tomorrow
I would probably agree with Ziggy, its a little uncommon that such a large parcel has passed that way without some positive "hint" to the intending seller. On the other side any buyer picking up 8 mio of shares would have needed to do some due diligence also, and again directors would to have to careful not to "hint" any positive news.
Directors have a duty to all shareholders and need to be squeeky clean when it comes to passing confidential information to selected parties. Announcments must be made in a way where all parties receive identical information at the same time. Their hands are tied and they just have to stand by watching the market do what it does best with all known information.
uk some growth not huge. China stuffed by certification but now all go. Aus some increase how big is key to tomorrow. Currency over year bad for profit but has dropped now. USA maybe a mention soon but then maybe they have enough markets to establish first. How will the market react? Milford must have seen something to buy so much surely they have a research team with national standards achieved at school. If it dives tomorrow buy millions of shares for next years result which I think is the most important for this company. If they don't have good results next year then down she goes big time.
maybe you don't have chance to buy today' price tomorrow, let's see.
At the end of the day, we know already that Australian market share is up, and therefore revenues will be up, but yet the share price is down from this time last year by 12%, and is 32% off its highs.
It is absolutely a harder call to make this year than last, simply because the product range is bigger and there is more than one market to consider now. Perhaps this is why I think we are seeing both some large buyers and sellers, albeit more large buying than selling.
It would seem to me that the market may have over priced in an uncertain result perhaps just because it is more difficult to estimate the new market contributions. Or perhaps, possibly even more likely, it’s just because of market correlations.
We could speculate some more or just await the results tomorrow, it does though help ones understanding of the business model to work it through.
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The Australian market has been and is still the mainstay, roughly each additional 1% in market share is worth around about AU$13M in additional revenues and Peter Nathan has told us that market share is presently "about" 9%, it could be a bit higher or lower than that, but definitely up from the 7.4% it was last year. We need to then add to that the revenues from the new product lines infant, UHT, cream, and knock off exchange rate movement.
Roughly every 0.1% of market share in the UK is worth around UK$3M, so any traction there will be interesting too, a 0.2% market share would not be an insignificant thing.
Plus, infant formula sales to China, ATM have told us that inventories were not disrupted, and the Synlait production pause was from the 1st May, so only a two month consideration within the reporting period anyway.
One of the more interesting full yrs is this one. No ovious sign of inside info before result as price has stayed same for a while. But still 1hr to go today. What time do they let the result out traditionally.
They usually first thing in he morning, like 8.30
All hell will break loose if it is put up by the NZX just after 10, moosie tirades anf calls for FMA action etc
It will be first thing. Already published and ready to go. Chairman will have a last gawk at over drinks tonight
Usually is a very loose term. They can be released at any point on their official day, normally pre-market however its at the companies discretion.
Historically most announcements released later in the day and ever after the close have been when the company has bad news to report :)
Director buying two days before announcement day, David Mair, 500,000 on behalf of.
https://www.nzx.com/files/attachments/199431.pdf
'Nature of relevant interest in those securities: Non-beneficial interest as shareholder of fund manager'
Can someone please explain in even more simple terms exactly what this means?
To me it sounds like the Director owns shares in a fund and that fund has brought shares in ATM. However how is this 'non beneficial?' He owns shares and benefits from the purchase?
Extra marks will be awarded for the use of hand puppets in any explanation.
All going to plan
Finances Superbly managed to show a minimal profit (better hand loss)
Sales growing, investing ahead of the game
Well done
Almost exactly as MAC called it
Yes all predictable. Looks like they will fund USA by internal cash flow not capital raising.
good aust results, but not very impressive the rest.
I dont understand why they want to enter the states now when they havnt even been able to get the uk operation up and running seems to me they dont have a good model developed yet for entering these markets.
I tend to agree that they have enough to focus on for now. Maybe their approach is fire lots of missiles and hope something hits like australia.
"The appreciation of the $NZ to the $A reduced operating rev by re $14 mill and EBITDA by approx $2.7 mill on the pcp"
This will almost certainly reverse in the 2015 year.
Yep as I said yesterday next year is the big result I believe. Will be interesting to see how market reacts.
It does take a few years to build a business and to make it profitable, whether you start one yourself, or a2MC do it in the UK or US. If all the new markets can be funded from cashflow, great, that’s full margin re-investment.
The day that a2MC announce a dividend will be the day I sell, but today the forward growths looks dammed good.
They’ve adjusted the 2016 goal from NZ$280 to NZ$230 for currency movements, fair enough, it’s always been an NZD estimate and was made back in 2012, will need to run and adjust the DCF on that.
New markets on the horizon, US next year, fresh milk into China, UHT into Asia.
It is really satisfying to be a shareholder of a company that is in such a competitive position that it can just pick the next market set each year and expand at will, that’s a rare thing.
Sales revenue up 24% ($107.4m up $20.9) while expenses up 28.6% ($106.7m up $23.8m)
It would be interesting to have a breakdown of expenses - expensed in Australian dollars (having a natural FX hedge) and those expensed in NZD affected by FX. Such a breakdown I thinkwould give us a better understanding of the expenditure on growth (unless my quick look at financials has missed where this is stated) and how well the Australian market expenses are under control. Is the price at the maximum the OZ market will accept or can/do ATM adjust price to supply increases?
Also noted increase in stock held end of year from 0.7m to $5.5m? Possibly some in China milk powder stock pile?
Overall very happy with my investment and company's continued investment in growth
Base Case Valuation: FY15 $1.10
It’s always a complex work up for ATM, if anyone with a genuine interest wishes to share research notes and analysis, happy to do so also offline.
ATM have adjusted their 2016 revenue goal from NZ$280 to NZ$230 to reflect currency movements, but have noted that this target does not include revenue contribution from the proposed US market. My last valuation was FY14 $1.09, effectively thus a ‘no change’ result.
Sensitivity Analysis:
Base Case (as below) $1.10
ATM Revenue Target Six Months Early (HY15 NZ$230M) $1.25
ATM Revenue Target Six Months Late (HY17 NZ$230M) $0.85
Base Case Basis:
DCF, WACC 11.0%, 30yr PG 3.0%, NZ$230M in revenues at FY16 as estimated by the A2 Milk Company, a continuation of 50% price point premiums, a continuation of gross margins at 35%.
This base case is prepared by applying numerical goals as provided by the A2 Milk Company as below in NZD. As such the applied long run exchange rates are those as assumed by the A2 Milk Company.
Revenue goal of NZ$230M by 2016
UK fresh milk market share of 1.8% by FY16
Australian market share of 10% by FY15
China infant formula revenues of NZ$60M by June 2016 representing a 1% market share
These acquisitions come amid a government-led push to raise food standards and strengthen the supply chains in the industry. China is also seeking to consolidate the infant formula industry and aims to form three to five companies with annual sales of more than 5 billion yuan each by the end of 2018, according to a plan released in June by the State Council, the country’s cabinet.
good or bad for atm
If the above is correct that would eliminate ATM, as by June 2016, they would only encompass 1% of market share in China.
Also..
http://www.nbr.co.nz/article/a2-milk...sion-bd-161515
"Moose verdict: buy the dips" ;)...he he ..thought they only made milk.....
Quiet day at the office, eh?
Pretty sure we were all expecting that result
Increasing market share to 9% in Aussy pretty impressive, a real lack of progress in UK,USA and China.
Maybe able to accept the China story and hold ups there, but the UK and USA results are way below the expectation the market had anticipated around the beginning of this year. Expectations unforfilled, result, downward pressure on SP. Someone knew that in March April this year or was there a concentration on the NZ/Occa FX cross rates?
Lesson to always be careful of is that success in one market does not automatically transfer to other markets.
Having said this A2 may be down in those markets but definately not out by any means. Good to see structures in place to further increase penetration...and all on cashflow.
Thanks for the heads up on your DCF model MAC. Its was always a longer term play, still is
Basically agree, Harrie. Australia has to be the foundation from which ATM builds in the period just ahead. Incidentally to put the 9% market share in perspective, it's 9% of milk revenue but just 5% of volume. Pretty good all the same.
I'm not too concerned about the other markets. ATM was unlucky to climb into a JV in UK with Wisemans just when Wisemans was about to be taken over by Mullers who had a different view about where A2 fitted in. ATM's already had experience in the States, not all of it good, but I'm sure they've learned a lot, especially about the market there. China is going to be a mad lolly-scramble. Probably ATM will have to operate under the wings of one of the big players. It certainly can't expect any help from the Fonterra BeingMate JV, quite the opposite in fact, as Fonterra will desperately want to suppress the "A1 risk" message in its biggest market. I'd be inclined to put the effort into UK and USA, and send some Platinum formula into China if it's not too difficult. The USA is the big one because there's a huge audience there that is intelligently and discriminatingly health-conscious about milk. Start off in a few selected regions there, and then expand without all the hassles of China.
Now someone tell me again how ATM are not dependent on Synlait, their CEO seems to think they are.
sales of A2's products won't ramp up until its main partner, Synlait Milk, gains registration, which Babidge hopes will be in September.
"We're very much joined at the hip with Synlait," he said. That relationship "provides more certainty and longevity going forward." A2 has made only two small shipments to China of A2 Platinum, the last in April. Once Synlait gains registration shipments would start in earnest, likely in the first half of the current year.
At least synlait new plant has nz registration today so it's been sent to china for their tick off. How long this takes the Chinese only know.
Good point on the volume vs sales revenue NT, guess the premium price paid for for a2 accounts for that.
Can't immagine that ATM will be excluded from the China market being "joined at the hip" with Synlait owned by chinese interests at the highest level, so I wouldn't think that there are too many road blocks there going fwd.
Diversifying into other product lines such as UHT, yogurt, ice cream etc is added value in the chain to those already sold on the A2 proposition.
I see an expotential growth pattern emerging for A2 milk and its by products in the next few years. Its just in its infancy at the mo.
No movement in SP despite a lot of positivity in the report...interesting!
a2 Milk mulls ASX float
http://www.smh.com.au/business/a2-mi...28-109glm.html
If there is money to be made in a2 milk, the Chinese will want to have a shareholding in the company. Then when it starts to look like it is going to make a good profit, they will then make an offer to buy the company outright. They will offer $1.10c per share, and the directors will say no, it has to be $1.35, then the Chinese company who wants to buy a2 will send all the shareholders a letter saying....If you don't sell your shares to us for $1.35c, then the share price will go back down to .65c. 90% of shareholders will sell out of fear and the other 10% will be forced to sell. But what the Chinese company did not tell you, is that the share price will probably be worth more like $2.35c with all the thousands of hidden retail outlets throughout China. I have been through this before with FPA waiting for the go ahead to supply appliances to the 30,000 up market outlets, but never happened while in NZ hands. But that is good bussiness for Mr. China Man. Maybe I am wrong, who knows.
Thanks for the link CE.. Interesting that they say A2 is actively looking at ASX listing. But this article also says that ATM will "externally fund its expansion into the US" .
In the FY14 recently released, they state :
"The Strategic Agenda of the Company is based on funding revenue growth in priority international markets from increasing Australian profits. The plan continues to be refined as a result of changing market dynamics and opportunities. "
AND
"The Company has commented previously that an entry into the United States fresh milk market is under consideration. The Company has both strong intellectual property rights and know-how, and consumer research confirms the significant potential for a2 Milk brand in this market. The Company has developed market entry plans with the objective of a targeted, regionally focused initial launch in calendar 2015. The current business model assumes a cash investment of around USD20m to be funded from cash flow and internal sources over a three year period. Our focus has been to develop a plan which captures the potential of the United States market whilst, at the same time, providing the Company an appropriate balance of risk and reward for this positive initiative. "
I am confused !
Tuned in to the radio this morning to see if ATM featured in te business news
ATM refused Radio NZ to join the analyst briefing and didn't front up with a promised interview. Wierd
Get left with chief cheerleader from Milford to give us the good oil
http://www.radionz.co.nz/audio/player/20147611
Talked to an industry player who is independent of Fonterra and ATM - small players are going to get squashed within the next 3 years in China. A place to be avoided at all cost.
Their hope is the point of difference. They have a couple of years yet to establish this in china.
http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by ziggy415 http://www.sharetrader.co.nz/images/...post-right.png
These acquisitions come amid a government-led push to raise food standards and strengthen the supply chains in the industry. China is also seeking to consolidate the infant formula industry and aims to form three to five companies with annual sales of more than 5 billion yuan each by the end of 2018, according to a plan released in June by the State Council, the country’s cabinet.
good or bad for atm
A2 deals thru bright dairy which is a state run company which also co owns sinlait milk processor.....above announcement may not be problem for ATM
Fonterra's JV with the Chinese is indicative of what's happening in that country. The Chinese are fed up to the back teeth with food safety issues and will tackle this via allowing a few big companies to operate in their market.
Anyway, the player I was talking to is subcontracting their manufacturing/processing plant to one of the big players. Cut their losses while they can.
Don't shoot the messenger - passing on the view of one player.
A2will be owned by the Chinese by then if it gets traction.
Isnt a2 the only fully A2 formula product in China at present? If health concerns are high on the agenda then wont that translate into a2 being highly sought after? Furthermore, what if a large scientific study finds that a1 milk is linked to autism etc - a2 could land themselves a huge market share as well as some pretty valuable IP.
Im not trying to be cynical, but what exactly is preventing chinese farmers from breeding A2 cattle and some chinese new mega-giant producing there own A2 for the chinese domestic market? Its a country not known for its particular respect for others IP.
ATM only want to sell their products to china through their distributor , didn't put any investment there, I can't see any problem.
TBH, they are a bit crap at cow farming. Have seen it first hand, at best you could say its amateurish, compared to most NZ farmers. But you are right, someone *might* decide to start stealing some A2 cows and farm them. The product probably wouldn't be trusted by Chinese consumers still though if the cows were still in China (remember 20% of Chinese farmland has huge pollution issues, most of their water supplies are polluted etc).
A2 has a premium and more digestible milk powder. Chinese consumers basically pay anything they need to for the health of their baby, particularly they middle class. And many Chinese women don't produce a lot of milk so supplement with milk powder and/or go back to work after yuezi (a month of confinement after giving birth, mostly still observed) and partly rely on milk powder. This is all good for ATM as they are positioned at the top of the market, are selling their milk powder in the west and now also in China.
Re Balances source - I heard EXACTLY the same thing about 4 years ago from a friend working in the milk industry in China who said within a year there will only be a few big approved milk suppliers (after the 2008 melamine scandal). The funny thing is now you have more small players than ever before... with the government planning on clamping down on them, I suspect they will simply join up to one of the big approved groups and sell the milk powder through them. It might get repackaged as another brand, but it will still be sold.
One thing I know is that there is absolutely no way you can stop Chinese consumers from getting what they want. They would have to ban all importation of milk powders if they really wish to keep the situation under control - a move that would be so deeply unpopular it would likely result in serious social discord. Something the Chinese government tries to avoid at all cost.
Speaking with DairyReporter.com, Geoffrey Babidge, CEO, the a2 Milk Company, said it expects to meet, if not exceed, the 10% target it set for itself in 2012.
“We’re ahead of that plan,” said Babidge. “We can achieve that 10% market share.”
“Optimistically, we can achieve something north of 10%, maybe between 12% and 15%. Only time will tell.”
Given its growth, Babidge said its was “probably fair to say” that efforts to discredit the a2 brand in the last year “really didn’t gain any traction”
http://www.dairyreporter.com/Manufac...-of-10-a2-Milk
The debate was actually benefiting A2 Milk by the increased public focus and would continue to do so as long as consumers were not misled about the benefits available from other products, Babidge said.
http://agrihq.co.nz/article/a2-poised-for-us-start?p=7
Biggest shareholder Freedom said this on Friday in their results announcement
The strategic investment in a2 Milk Company provides the Company and its shareholders a potentially significant value creation opportunity through a2 Milk Company’s growth in Australia and international markets.
And this
While the Company intends to maintain a strategic shareholding in the medium term, it will retain the option to realise capital from the investment to support growth opportunities.
Interesting
As an aside they have this shareholding in their books at $10m - current value $70m
failure to break the 67 - 68c resistance combined with a poor report suggests lower prices to come.
breaking down, consolidated between 63-68 implies 58c for move. dyor
OK, so am I reading from what winner69 has posted that freedom foods see more luckrative growth opportunities elsewhere other than supporting growth opportunities in establishing other markets for ATM?
If that is the case 0.58 sp and below looks likeley in the short term
Milfords Kiwisaver funds unit price will take a big hit. Supporting growth stocks with expected potential does have its downside.
This is the problem with punters using performance stats to decide which kiwisaver fund they are going to support.
The issue is that there is no data available around volatility which is a reliable indicator of the risk taken in acheiving outperformance.
I dont think freedom foods was ever going to be able to do takeover unless they paid some crazy price so only option they have is to sell out now the best short term gains have been made
That is interesting Winner, one wonders what growth prospects Freedom may have offering better long term prospects than ATM. It may just be they have choked and run dry of seed capital for start-up’s.
Shouldn’t be any difficulties though in selling (their 17% stake I think), probably plenty of Chinese, Australian and US dairy interests standing in a long cue to snap up ATM at these undervalued levels. Maybe even Lion, Parmalat or Fonterra :).
this stock is going to burn the cash i believe so look forward to some cap raisings
Freedom Foods has big plans for expansion into Asia and the US, so they could certainly use the cash realised from their 17% stake. And they're not an outfit that wants to be locked in as a longterm minority passive investor in someone else's development strategies that don't have a lot of synergy with their own. I would have thought their withdrawal could tie in quite nicely with ATM's Australian listing and float plans. Rather than depressing the SP, I think giving Aussie shareholders a piece of the ATM action at this time could be quite beneficial.
NT, We are not actually sure that it is freedom foods doing the selling at this point, its only an option they may use in the future although it would be fair to say that if they were not thinking along those lines why even mention it?
With strong growth in Aussy and firm plans for expansion, $16mio in the bank, no debt, product diversification, the synlait connection etc, why sell?
What other opportunity out there is going to top that?
Yep, and from the Freedom FY14 report below, medium term typically means two or three years, and they retain an option to realise some capital after, as I read it, a significant value creation opportunity.
Well, so do I and probably most in a similar timeframe.
“The strategic investment in a2 Milk Company provides the Company and its shareholders a potentially significant value creation opportunity through a2 Milk Company’s growth in Australia and international markets. “
“While the Company intends to maintain a strategic shareholding in the medium term, it will retain the option to realise capital from the investment to support growth opportunities. “