I think perhaps ATM are the opposite of Comvita's "end-to-end business model". ATM don't produce the milk, don't process the milk, and don't seem to have anyone connected to the market. They are disconnected at both ends.
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don't process the milk - I presume their 19% share of Synlait doesn't count? Or their pending acquisition of 70% of Mataura Valley Milk?
don't seem to have anyone connected to the market - what does that even mean? Dedicated sales forces in Australia/ANZ - $317m 1H21, dedicated sales force China - $326m 1H21, dedicated sales force USA - $34m H121.
No, they don't currently process milk. I'd question how well they are connected to their market since they seem to have been completely blindsided by changes in their main route to market. My observation, as a holder, is that their "capital light" business model where they focus on the brand and are relatively hands-off at each end of the business, has been shown to lack resilience when things go pear-shaped. They are addressing that I think and that is IMO the right strategy even if it erodes margin and growth.
ATM's chart currently looking the best it's been for a while (since its high one year ago). :):)
Currently RSI +ve (buy signal), trend behaviour changing?, DMI triggered a buy signal. These signals are new and for the conservatives
the price breaking the $7 resistance line will be the confirmation they want. If that confirmation happens it would give odds of 70% that the share price would continue to move higher (>5% increase), including a possible (50% chance) "throwback event" to retest the old $7.00 resistance line break (second chance buy in).
Disc: still watching but getting interested. ...
Currently $6.78 up +22c
Glad you posted that Hoop.... I've been thinking the same. Couple of nice gaps on the upside too.
Disc - holding LT, happy and not adding.
Look - I think the difference between our views is that I am quite emotionally decoupled from the company. It does not make any difference to me, whether they shine or crash, but I do find them an interesting case study to learn from.
It feels that you might be quite committed - and this brings out the pink coloured glasses. Sure - the four downgrades and their ineptness to manage or understand their sales channel might be only a bad dream in a year from now, but it might be as well the start of a trend. Whatever it is - the world has clearly changed, and how well did they deal with the change last time? See.
Bad management and bad governance in my experience does not go away unless you actively do something about it.
Nothing wrong with pink coloured glasses in the right circumstances ... but for me and my money I think there are much safer bets for a reasonable return.
Why do you think ATM is a good company to invest in given all these uncertainties?
+1 Great post, well said. A forward PE of 27 is normally associated with a company with a well proven track record of growth without the major challenges you mentioned as well as many others ! In fact four years ago when it was growing REALLY strongly without all the current challenges it was on a forward PE of about 30.
I’m not emotionally attached to it. I do own some at a $7.10 average but not overly bothered as it’s a small holding. On the contrary I think some posters here are behaving like they’ve been burned and want it to go to $2-3 to validate that they got out etc.
As I said at $6.50 given the growth they showed 2016-2020 and what’s happened I don’t think a “strong recovery” is priced in at all. Do you seriously think if a strong recovery in sales takes place over the next 6-12 months the share price will be around $6.50 because that’s all I was responding to from Beagle. Each to their own obviously but a strong recovery imho will see a much higher share price.
No guarantees of course as I said earlier.