Bell Potter who were bashing A2 previously have upgraded their rating to "Buy"...explains price rise today.
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Bell Potter who were bashing A2 previously have upgraded their rating to "Buy"...explains price rise today.
With half way through April, they should've good handle on how previous quarter ending March went and also trend into the last quarter. We shouldn't be too far away for an update from the company, be very interesting.
I guess just looking at the pattern it would be about time for the next step down, wouldn't it?
Attachment 12434
But then they say that the past is not a reliable indicator for the future ... and sometimes they are right (and often wrong ;) ).
All within 48 hours :
https://www.fool.com.au/2021/04/13/i...m-share-price/
Bell Potter has taken a more positive view on the A2 Milk share price. This is due to the belief that issues causing its recent downgrade cycle are reversing.
The report first highlights A2’s move to materially scale back its Australian infant milk formula (IMF) deliveries to address excess stock.
It notes that exports from Synlait Milk Ltd (ASX: SM1) to Australia were down 72% in the past 6 months since September 2020, relative to the 6 months to August 2020. Bell Potter said that “inventory infill appears to have materially contracted, addressing one element of the inventory build”.
In terms of Australian exports to China, the report highlights two sequential monthly gains in finished infant formula exports since the December 2020 lows. Interestingly, the broker did not expect an uplift to occur so early on, calling this an early sign of life.
https://www.fool.com.au/2021/04/14/a...t-uncertainty/
According to a report in yesterday’s The Australian, as a result of Australia’s delayed vaccine rollout for COVID-19, the country appears unlikely to reach herd immunity by the end of 2021 and therefore not open its borders to international students.
https://www.shortman.com.au/stock?q=A2M
Shorters continue to cover, providing short term price support.
Chinese Diary companies SP's rally after government announcement that it should remove all birth control to encourage people to have more children. See it here.
Interesting - which part of my post did you not understand?
I guess looking at the Chinese population pyramid is not that hard and most people even might know that women between 20 and 40 are most likely to be able to bear offspring ... Oops - I hope this is not too shocking news for you, isn't it :scared::
Add to that that many of the even still available princesses in child bearing age don't really want to go through the process anymore - and certainly not more often than once.
Just connect the dots and (depending on your desires) your amusement levels might drop :p - or alternatively - just keep your head stuck in the sand ... though - laughing while the head is stuck in the sand might be an unpleasant experience as well ...
Attachment 12439
UBS report 6/04 if anyone missed it.
The demographics may well suggest that the birthrate in China will inevitably fall. But does that mean that the premium end of the IF market will shrink?
I imagine that only a tiny proportion of the Chinese population are currently in that market, but that proportion will increase - ie the rising standard of living in a very very large population will swamp any drop in the birthrate.
As I see it, ATM's future success will come from it's continuing ability to sell all the A2milk we can produce at a healthy premium.
Disc: - halved my holding just under $12 a while back for reasons totally unrelated to my view of ATM's long term prospects.
Chinese cuisine is great and healthy ... unhealthy fatty snacks are not really part of it. Means Cadbury will have endless future opportunities to keep failing their delusional targets :).
But hey, given their success in fattening up NZ and Australia (hand in hand with Coca Cola, McDonalds and KFC), it must work with China as well, mustn't it?
That has to do with how wealthy they are. Generally affluent areas of China like shanghai consume chocolate more often, but the average Chinese individual only eats a tiny amount of chocolate per year. Apparently 100 grams
Ps Over half of adults in China, or more than half a billion people, are now overweight, an official report has found. The figures have risen significantly since 2002, when 29% of adults were overweight. The country's rapid economic growth in recent decades has led to major changes to lifestyle, diet and exercise habits.
Did you guys see the news on University of Queensland has enrolled a record number of international students in 2021? They see 50% increased in Chinese student compared to 2020, defying predictions that closed borders and negative messaging from the Chinese government would dampen demand. However, some university in OZ experienced a drop in enrollment. I am wondering if those are students got stuck in OZ and decided to carry on with education. Has their border opened up yet?
Inventory drawdown and discounting looks to be coming to an end across various E-Commerce platforms. Most stages selling well across various stores, especially Stage 3 as usual.
Interested to see if the company will give an update as we are now in the much anticipated 4Q. BKL is doing an investor briefing Thursday, looking to see how their corporate daigou reactivation is progressing.
See attached photos; of note the JD.com live-streaming event where 374,000 people tuned in!!!
Attachment 12445Attachment 12446Attachment 12447
Perhaps users of JD Com are smarter than you give credit.
A2 now #3 on the JD leader board. See pic below.
Attachment 12448
Just saying...... as always DYOR 'cos I am biased.
It may be via QEX the missing IF
A couple of months ago you were wahhing on and giving us weekly updates around the high A2 IF price vs the Karicare price at your local Pak n Save as if the premium price was an unjustifed bad thing.
Now you are going on about the reduced A2 price being a poor strategy? Make up your mind instead of being the negative thread contrarian.
Australian broking house Credit Suisse had cut its target price by 14 per cent on A2 Milk to A$7.14 (NZ$7.71).
Hey all. Just another random check on my ol' fav ...
Random observation: I saw an A2 infant formula advertised on TV a couple of weeks back. Can't say I've ever seen A2M's IF marketed on TV here in NZ.
Also, I can't remember if it was here or over at HC, but someone posted a price comparison between A2 and other IFs (Countdown). IIRC, A2 was close to twice the price.
It may well be a solid, quality product. Doesn't mean the more competitively priced competition is rubbish, either. If I were a discerning customer with a baby (and bills), I might not be able to justify paying so much more for "premium" when there are several other products that appear to tick the same boxes, at nearly half the price.
https://www.fool.com.au/2021/04/20/d...m-share-price/
Credit Suisse’s rationale for downgrade.
Was it A2 advertising or was it Haven? Haven (havenbaby.co.nz)
It is definitely worth looking to see who is behind Haven.......would think pretty small scale - at this stage
Significantly cheaper ($29.95 for stage 1 via their website compared to $39.00 at Countdown for A2).
Zuru is behind Haven...
a2 just about to make new lows , last area of support around 7. 80 - 8 .10 area then it goes all the way back to $2. why had such a big run up from 2 to 8 with out stopping on the way up. maybe it find it natural level then between to 2 and 8 then
Sp must hold A$7.50.
If it does not, a rapid drop to A$5.30 is a certainty?
https://www.shortman.com.au/stock?q=A2M
Shorters seem to have stopped covering and started selling again?
Did anybody notice yesterday, that ST had 477 viewers during the day, instead of the average 250?
Was it because both FTSE & DOW were down, and viewers may have been looking for opinion/guidance?
Comments please.
Pardon me for posting this here, but I thought I'd insert into a well read thread.
Intriguing how the sp still gets bought up on the NZX in the mornings when we all know that the real action really starts when ASX opens!
Just speculation, but when there's a sea of red ink and ATM touching new lows, anxiety levels go up, amygdala gland gets hyper active sitting off a chain reaction, frontal cortex (logical thinking) gets engaged to calm things & seeks reassurance from the many reasoned and well informed ST posters we are still on right track, whatever that is. :mellow:
Thoughts on the sector from Prof. Woodford;
https://www.interest.co.nz/rural-new...g-across-globe
Keith Woodford's opinion about the state of A2 milk - interesting read.
It is clear from his opinion piece that ATM has lost sight of the need to invest in R&D to maintain its leading position in the industry - something that top notch companies do.
We all know that ATM did not believe in Jayne's strategy of accelerated spending on marketing and promotion to maintain and enhance its competitive position.
All short term thinking with ATM, it seems and now the new CEO must step up to steer a new direction - long term gain from short term pain.
https://www.interest.co.nz/rural-new...g-across-globe
Excerpts :
"Many more A2 milk and A2 infant formula brands are now emerging across the globe but market leader The a2 milk Company is struggling."
"Internationally, there are multiple A2 brands of both A2 milk and A2 infant formula now available, particularly in Asia, to a lesser extent in the Americas, but with Europe still lagging.
Most of the big international brands now have A2 projects. Including niche marketers, there are probably more than 20 brands spread across the globe."
And this is the most disturbing bit :
"Whether COVID is the only pothole for ATM is a moot point. About five years ago the company decided to focus on its own brands rather than further developing the category. At that point, they stepped back from major research funding.
Even before that, the company was managed primarily by marketers rather than scientists, but then they pivoted even further towards marketing. I think they were dazzled by their own success. They lost sight of fundamental issues relating to the need to further build the science foundations."
https://www.nestle.com/media/mediaev...ee-month-sales
Clock is ticking....
It's such a shame that the board didn't pull through with Jayne's strategy. We could have been like Red Bull or Coca-Cola for the dairy industry and build up this moat around us with instant brand recognition but they were so short-sighted.
On a brighter note, according to MPI report last year, NZ's highly trusted dairy all sourced from GMO free, free range, grass fed, cows is a strong advantage over many of the international brands. Over the years corporations like Nestle have at various times been involved in some shocking practices including in the IF area.
Absolute trust in the integrity of a product any mother is putting in the mouth of their newborn child is extremely important & once a companies reputation is tarnished it is very hard to ever fully regain it.
On another issue, interesting to see China media praising our Foreign Affairs Minister's recent speech & independent stance, & talking about closer cooperation with NZ while relationships with Aust, US etc continue to deteriorate. Got to be helpful for NZ brands to Chinese consumers.
Nestle selling down their a2 portfolio, strategic stake imminent...
Attachment 12452
https://www.interest.co.nz/rural-new...g-across-globe
From the same article...
"Sometimes I get asked by farmers as to how long I think it will be before the A2 premium disappears. My response is that they are asking the wrong question. In the long term, the question is when will the A1 milk sell only at a discount. That situation may still be a long way distant, but it is coming..."
From Press Release of Nestle Three-Month Sales to 31 March 2021:
"China saw double-digit growth, helped by a recovery in out-of-home channels and the timing of Chinese New Year. Growth was broad-based across most product categories, reflecting continued momentum in e-commerce and a strong innovation pipeline. The largest growth contributor was Nestlé Professional, as sales improved significantly. Coffee, culinary, dairy and confectionery all grew at double-digit rates. Growth in Infant Nutrition turned positive."
Looks there are no reasons to be pessimistic on A2M China sales.
Interesting. I wonder what the new CEO has been reading in the tea leafs?
"Blackmores CEO says $200m in daigou sales gone from industry. Alastair Symington said on Thursday that even when international borders do open up again, the size of the daigou trade would be lower because of the severe disruptions which had taken place during the COVID-19 pandemic."
https://www.afr.com/companies/health...0210421-p57l88
Those who assert that China domestic brands are no threat to foreign brands need to reconsider & rethink strategy again.
https://www.theaustralian.com.au/bus...825328105ccfde
Excerpt :
‘Chinese consumers are shifting their loyalties from popular high-profile foreign retail fashion brands, such as Nike and Adidas, to local Chinese brands with that trend also emerging in the purchase of vitamins and infant milk formula that could pose a risk to Australia’s A2 Milk, Bubs and Blackmores.’
"A recent note on Chinese consumer preferences by Citi analyst Sam Teeger said a survey of 1000 Chinese consumers by Citi’s US Retail Team revealed consumers are more likely to buy domestic athletic brands (Li Ning and Anta) as compared to foreign athletic brands (Nike and Adidas)."
USA head”s interview-about 2 weeks ago.
https://www.bloomberg.com/news/video...isrupted-video
I see jacinda didnt offer any new climate iniatives at the summit , so the number of cows in NZ are safe for now.
This is just so brutal. Since reaching its high it only had like 4 weeks where it finished higher on a Friday than when it opened on a Monday.
Looks grim - next stop A$5.30 if it closes below A$7.50 at the close this afternoon on ASX?
Meanwhile, another broker (previously positive on A2M) has downgraded its recommendation and valuation :
https://www.fool.com.au/2021/04/22/w...ear-low-today/
According to a note out of Morgans, the broker has downgraded a2 Milk’s shares to a hold rating from add and slashed the price target on them by almost 20% to $8.34.
The broker made the move after its research indicated that prices in China are not improving and retailers in the local market are discounting inventory ahead of use by dates. Morgans fears that its excess inventory could be a bigger problem that it previously anticipated.
Based on this, the broker believes that a2 Milk is unlikely to achieve its guidance for FY 2021. This would be bitterly disappointing given how the company has downgraded its guidance numerous times since it was first given to the market.
Update too from Citi:
Citi reiterated its sell rating and $7.15 price target on the company’s shares.
It also has concerns over discounting as excess inventory nears its use by dates. But as well as this, the broker’s research appears to indicate that Chinese consumers are now preferring domestic brands for consumer products. This includes athletic brands, vitamins, and, unfortunately, infant formula. It feels this could impact demand in the key market.
Looking grim. Below the 52 week low. Dropped under a $6b market cap.
It's getting closer to my $7 buy price. Based on 25% ebitda margin and 10% growth rate for 10 years.
its been hammer time since $20
really the price is going lower today because at the climate summit they discussed the impact of cow farts on the climate. did you know 1 cow can burp and fart 160 odd litre of methane into the atmosphere. thats a sh..t load of methane being emitted each day from the global cow population. now the consensus is being decided on what the idea population of cows should be on the planet. less cows less a2 milk?
Remember it wasn't so long ago that management reiterated that in the medium term 30% editda margins were achievable. Not that much credence should be given to management.. At last check they were at 27% but from all the talk of clearing stock and general competition I thought 25% was more likely.
5% growth rate is $5.04 share price :ohmy:
Problem solved:
Feeding cows seaweed could cut their methane emissions by 82%
Disc: Hold neither A2M nor seaweed
To those that follow ATM could you please provide some educated views on the following...
Is it a lost cause holding onto ATM shares. Stupidly bought in near its highs right before it took a turn for the worse. It's hard to believe the share price has dropped 60% for this company off recent SP $21 highs. Is there any point holding these shares in the hope the SP will recover in the next couple of years? Or should I cut my losses and move on. It is hard to see the SP dropping further and further, keep thinking it cant go any lower and must find support for a recovery at some point?
I doubt your question will prompt anything more profound than has already been expressed on this thread. Some people think it is still over-priced and will drop further as managers and punters get a more complete idea of how things are likely to travel post-covid. Others think it is under-priced and will start to rise once managers and punters get a more complete picture of how things are likely to travel post-covid. In other words, your guess is as good as anyone's.
The time to sell was around downgrade level 2. That was when Beagle and co were barking at their loudest warning of issues the company has. I did the same as you and purchased high, ended up getting out at $12 which was painful at the time but obviously happy now.
If I was you I would hold. If the position is less than 10% of your portfolio maybe even top up to DCA. If your holding is over 20% I wouldn't add. Just hodl.
There is plenty of upside with a huge china market that still has low penetration in the MBS channel and other growth to come from south east Asia and North America. Who knows, the new CEO could be a absolute guru and turn the company around.
GLH
Raided all nooks and corners around home to get a small top up at the close, can't be that bad this A2 story. Something's gotta give one way or other.
Mate you're in the hell zone. A couple of stories. I followed CNU all the way down to the $1.30s and kept dollar cost averaging. Why, coz I believed they'd eventually climb out of the political crap they were buried in. Worked out pretty well.
I bought into NZR at the top and watched it slowly decline. I didn't believe it could recover from a number of negative influences and so I bailed in the low $3s and took a sizeable haircut. Glad I did coz look at the sp now.
Obviously theses 2 cases are of no real immediate help but hopefully they'll prompt you to do your research on the company and the macro economics and based on what your conclusions are you'll commit to sell, hold or to continue investing. This share market game can be a tough gig and there's no easy path to riches. You win some, you lose some but hopefully you win more than you lose and along the way you learn heaps. I wish you well. Good luck!
Stay away until there is a clear upward trend. This has been a falling knife for 6 month
This is going to sound mercenary but hopefully, it will provide you with some guidance as what to do.
In the sharemarket, what holders (who have taken an absolute hammering) like you do next is one of the turning points experienced investors monitor closely.
Why, because the pain often becomes so great and unbearable that even the diehard believers finally give up and sell out - in other words, CAPITULATION.
And capitulation is when the experienced seasoned investors swoop and mope up shares off the tortured hands.
Imo your downside from here is probably around A$2 before it finds good support (based on technicals) - your upside could be much higher if the new CEO comes out with a really good strategy and convincing story of how the company intends to use its strengths to rebuild a better sales & marketing platform than one so dependent upon a low cost but opague sales channels which have proven to be shaky.
I certainly am not touching the shares myself until the new CEO articulates his strategy, and it better be a good and coherent strategy PLUS the sp shows a clear uptrend.
If I have to pay $10 to get back into the game, I am happy to. There is nothing more soul destroying than watch a share making new lows after buying it!
Speaking of new CEO. Have we had any kinds of interviews with him in newspapers or magazines? When Jayne became CEO I quickly had an impression what she was all about but the new guy is a mystery so far.
and @ Maxtrade. Never guess a bottom. However I do believe in DCA when a) the story changed and I like it and b) the market seems to like it too and it is trending up again.
Remember that David was appointed in August 2020 when everything was sweet for ATM - record sales, record profits, bright outlook and share price at all time high.
He was going to take over the rein with a solid growth platform to take ATM to new highs.
Then came the sale of shares by insiders and the triple profit downgrades.
He is a seasoned operator (like Jayne) but he is not going to make the same mistakes as Jayne did - mouthing off strategies & plans until he has assessed fully the unhappy situation ATM is in & put in a place a strategic plan to turn things around.
A plan with 100% buy in & support by the BOD before he announces it.
So his announcement is eagerly awaited.
Because of this uncertainty I sold all my holdings some weeks back. I can only see 3 reasons which would move the SP upwards where I would feel I missed out.
a) exceeding and upgrading forecasts
b) another baby formula scandal in China
c) takeover activity
Neither to me is likely in the short term so why hold and freak out about the constant downward spiral.
I like the last 14 posts. Very good reading. I have still got my 50c shares which am not selling, but am also waiting for next update. Am not going to say how many thousands my portfolio is down this year. A2 does it to me every year for the last 3 years, but this year is a bit deeper, but I can absorb that. A2 update was on 22/4/20 last year. This years update not out yet. What normally is the results of a later update?
I also bought at a $20 average, caught the knife down to 60%.
I noticed very important patterns that altered my decision to sell a few weeks back
1. It was affecting my mood almost daily.
2. I was scrambling looking for reassurance.
3. I wanted to defend every positive remark towards ATM and snuff at every negative remark.
I decided the paper loss was not significant enough to alter my mood, I felt my mood changed because I spent time looking at share forums and being a part of the spit for spats. This is Investing 101 don't dos, do not be emotionally involved, I told myself I wasn't but now I see I WAS emotionally involved.
So I sold at a 60% loss and said if I believe in the company I can buy back in later. Take the loss and learn.
Now I have sold I look at the company differently. It's funny how we tell ourselves it's fine.
I'm not telling you to sell, I do not know the impact on your mood or financial situation but what I would say is, if it's not a big enough loss to recover has it all been worth it?
I wish I stuck to my plan that if it falls below 10% I would sell, but I never, instead I fed into others positive outlook.
Now I have taken what was leftover from ATM and reinvested elsewhere I have already made almost 50% back of my loss and feel a lot happier with a very expensive basket full of hard-hitting new lessons.
Hope this helps you make the right choice for your own personal decision maxtrader.
Fantastic SW, I bought ATM at average 77c, but sold out all at around $11. Now I re-enter from $8.5. I don’t think A2 story is over given it has successfully built brand awareness in China. And its penetration is still low in China. The mistake A2 made over the last year is miscalculation of daigou in Australia & NZ, which caused excessive inventory held. Now they have to discount the price to quickly sell these inventory that are close to expire date.
But at same time, I note A2 Chinese label IF sale at much higher price, which means as long as A2 IF has normal length for date of use. They can still be sold at premium.
I would also like to point out I didn't just sell primarily for my mood and mental health. I decided that the world is still far too messy with Covid, the daigou is still likely being hammered with a lack of students. China is pulling away from western markets and the road for ATM recovery will be long and punishing.
Somehow I am still up overall on A2 despite topping up at much higher levels. Another $1 down and that story will change though!
I think the story is looking a bit bleak at the moment, and in the short term there is probably better investments elsewhere.
However, I don't see the point of selling if you still believe in the long term potential of the company. I am trying to add onto my portfolio these days, rather than moving investments around. This tends to work better for me. A2 is probably the only exception where I should of seen of this coming 6 months ago. I think the market has priced in most the negatives now though, so I do see more upside overall at these levels.
It’s all doom and gloom at the moment. I agree that the company is going through some serious issues both logistically and also in terms of competition. But NZ govt”s recent 5 eyes announcement in detaching trade with “other” issues could be a master stroke for A2. Hope they capitalise on it(it is still a NZ company)
Last results investors call is attached ( about two months ago) if all is delivered as per their projections then we should see an uptake.
https://assets-au-01.kc-usercontent....-%20250221.mp3