https://www.fool.com.au/2023/01/28/a...0+January+2023
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If the reserve bank raise interest rates by another 0.5% in Feb, you might get more analysts rating it as a SELL
https://www.bbc.com/news/world-asia-china-64457367
https://www.bbc.co.uk/news/world-asia-china-64457367 may help sales in 9 months
Lease, I don't think so either, it's just lingering doubts from those who have failed to realise that ATM bottomed out and turned the corner many months ago, completely revised their distribution and sales channels and are on track to record results, very profitable, along with no debt, a massive cash hoard giving them choices, a share buyback less than halfway through and an SP that is UP a massive percentage from the recent lows. Almost all the company bashers have gone now and it's still not too late to join the recovery.
Sentiment expressed on discussion groups like this, are quite often not reflective of market sentiment, or reality.
SAMR registration seem to be in the last stage of finalisation. Nice one, onwards and upwards from hereon!
https://www.nzx.com/announcements/406946
Revenue up 18%, Profit 23%.
Results commentary:
http://nzx-prod-s7fsd7f98s.s3-websit...946/388833.pdf
Very pleased H1 results. The CEO is great!
Forget the past …this is the new reformed A2
Excellent results, hopefully the market agrees and carries on with re-rating ATM, up 85% from it's low already. Still 40% of the buy-back to go. SAMR approval is close. USA liquid milk excellent growth, might see IMF coming on stream with the FDA exemption.
22k through so far in NZ this morning.....
Waiting for the ASX to open to see what the Aussies are thinking of it.
Good call. I guess it can never reach the pre-Covid highs.with continuous decline in birth rate with its biggest market, these are serious headwinds.
average result , outlook bit weak. probable giving up those rally before the fact gains
$12.6 million inventories written down or written off seems an awful lot of spilt milk
WTF is going on with ATM today a big 5% drop after 1 hour of trading now @ $682 !!
Would be nice to see A2 out perform again but there’s so much geopolitical uncertainty with the West and China right now.
Yesterday there were plenty of headlines about US threatening consequences for China if they supply arms to Russia. Imagine what western sanctions on China will mean for A2.
The long term outlook is just as volatile as the short term.
Price down sine results announced
But let’s not forget it’s still 64% higher than 52 week low
Pretty good
Off the bottom for now, please keep it up overall I didnt think the recent result was too bad so cannot understand the gloom going forward !
I think the gloom going forward is that it already had better growth built into the shareprice, the PE is rather lofty for low double digit growth.
I think the best strategy is to watch for new leaders emerging from whatever mess we are presumably heading toward. Cash is king imop.
Strong close on ASX at 6.46, cent shy of day’s high. Equates to 7.10 here.
Let’s see what tmrw brings..
Buyback mode activated and in full swing.
Just got upto speed with BUB results released end last month. What a shambolic performance, wouldn't like to be holder in that outfit. So much for getting first approval to supply to US market last year and that Corporate daigou once called A2 Andy jumped on their side and everyone thought BUB is the next big thing in IF market. Wouldn't touch it with a barge pole after looking at their recent numbers.
https://www.nzx.com/announcements/408581
Buyback now finished....average price $6.87
$150m well spent?
For the amount of buying they did above $7, it’s incredible they couldn’t stabilise and establish a floor above $7, even for the short term.
Anyway, congrats to all the insiders who used this liquidity injection to exit on their positions at the expense of the company’s cash reserves.
The purpose of the share buyback has nothing to do with controlling the share price, in fact it is deliberately conducted in a manner that does not significantly affect the share price.
Shareholders should be happy that there is now $149 million worth of shares that have been cancelled, as they all now own a larger percentage of the company.
Bad day for the white gold stocks ……both SML and ATM down 5%
Could be a rough week
What do the charts indicate where the next support level is for ATM?
https://www.rnz.co.nz/news/lobbying/...porate-clients
Interesting read- so A2 involves lobbyists to press their case to gain FDA approval… which was a success, which makes me wonder whether they would be doing the same with the Chinese regarding SAMR… curious enough our foreign minister is on the two day trip to Beijing.
china has also recently installed new national mandatory standards for imported dairy products and infant formula that impose a burden on manufacturers such as A2 Milk. The dual-listed is still waiting for its registration to be officially approved and has been stocking inventory in the meantime.“Timing is uncertain and subject to State Administration for Market Regulation (SAMR) approval. If this approval isn’t achieved, it would impact A2M’s China label infant formula sales ([roughly] 30 per cent of 2022 group sales),” Moore said.
guess the same issue for synliat in there registration
https://www.theage.com.au/business/c...23-p5cusy.html
subtle downgrade by atm today
As a result, the Company expects revenue growth to be at the low end of its previous expectations
https://www.nzx.com/announcements/410403
guess the possibiliity sml go bust wont be helping atm there % s/h would have to be written off
The possibility that SML might go bust is very very low, but the possibility that Bright Dairy and A2 Milk let that happen is minuscule. Combined, or even A2 by itself, could write out the cheque for the SML takeover, they have such a huge cash hoard. It's only important because SML have the key supply agreement to A2 and the SAML. Remember SML are majority owned by the China government, you reckon they'll let it go bust? Yeah right.
Agreed.
The Chinese invest with a 50 years time horizon as opposed to the short sighted quarter by quarter horizon of many a Western company.
Reason why an Asian company is now NZ’s largest private forestry owner. Remember how we used to have Fletcher Forests, NZ Forest Products, Carter Holt and Evergreen Forests dominating the NZX?
China wants (has) an ownership stake in the whole value chain, end to end. When they decide what value chains they want a stake in, well, they go after it and we can all see ATM and SML are part of that, as far as dairy products are concerned. Anyone can research who really owns SML and a decent chunk of ATM as well. But do they do that research? Or just post nonsense on a public discussion group about something they don't really know much about, or own but might want to own, if the price is right for them. So transparent it's laughable.
Follow the money, it doesn't matter where it comes from. Align your horizons to the owners, you'll do very well, as they will.
Don't forget Fonterra.
https://www.nzx.com/announcements/411090
Musical chairs.....
big changes coming after synliat warning ?
This is a post from KW in the other forum ... and I think its worthwhile to repeat that here:
Anybody involved in the Jayne Hrdlicka bashing at that time is hopefully ashamed.Quote:
author=KW
Maybe everyone was too quick to judge ... :(
Back in Dec 2019 Jayne Hrdlicka said "she had not anticipated the amount of travel involved when she took up the role 18 months ago... The Board and I agreed that this next phase is going to be too difficult to manage alongside my other commitments whilst also managing the health and wellness priorities of my family and me."
Turns out her husband was given a terminal cancer diagnosis in Nov 2019. He has now passed.
https://www.afr.com/markets/equity-m...0230508-p5d6t2
... it appears that tragic things happen even to CEO's ...
I think we should send her and her family our condolences ... and maybe learn that sometimes family reasons are not just a cover up when senior staff is resigning.
I think many people just reacted to the negative, they didn't take in account her reason for leaving, spending time with her family, the health and wellbeing of them, which in hindsight did tell us something albeit cryptic.
Unfortunately though she had already destroyed shareholder / Board relations prior to that with disposal of her sign-on shares, millions of $ worth, so it's not surprising imo that investors reacted badly to her resignation and didn't give a second thought to the underlying message that some sh1t was going down in her life and her family.
A lot of what she wanted to do seemed to make sense at the time, but I think she was battling the Board ego's who didn't want to upset the high double digit growth/earnings. And she had put shareholders on the defence. Well, we now know how that worked out.
All corporate listed company announcements are carefully crafted to obfuscate the underlying meaning, so as not to alarm shareholders, but all it does it actually does is create uncertainty and doubt which is the opposite of what they intended! It would be refreshing if company's just told the truth, plain and simple, like 'our CEO resigned because her husband is unwell and needs support that she can't give as well as meeting the demands of being CEO'.
That said, she really did smash shareholder confidence in her and the board, by selling her sign-on shares for millions, with the excuse it was to pay for 'tax expenses'. Even if it was true, it screwed her credibility and put the Board under a lot of pressure for not having considered that the CEO might just sell her millions as soon as she got them.
So, no matter what her reason for resigning, however obfuscated, she and the Board were already not trusted by shareholders.
What came after that was a complete disaster, not solely of her making, but the Board do still have class action law suits to answer to, they appear to have really screwed up and will have to defend why they didn't.
https://www.cfe-samr.org.cn/sldt/sdx...0605_4921.html
SAMR Approval
It does: SAMR approves re-registration of a2MC's China label IMF - NZX, New Zealand’s Exchange
"SAMR’s approval will allow Synlait to manufacture 至初® for a2MC until September 20271" This should make Market happy!
Did A2 destroy Bubs China business or is the China IF market completely stuffed
Bulbs sales to China hardly anything at the moment …..there’s just too much stock in warehouses over there…..5 years worth
From Bubs the other day -
As previously reported, there remains a significant amount of inventory held in trade, predominantly Bubs Supreme. This product was developed for AZ Global and Alice for exclusive distribution into China. Bubs Australia understands there is more than 5 years of Bubs Supreme finished goods inventory held in multiple warehouses, based on the current rate of sale.
birth rate still trending down in China; 6.77 for every 1,000 people, down from 10.41 in 2019
https://www.ft.com/content/541008b7-...d-3e4a9d34c198
might be a market wide problem. but A2 is surely better than Bubs? so maybe not too bad eh.
it does not matter if the birth rate is down. In 2022, around 9.56 million babies were born in China. The number of births has decreased gradually from 17.86 million in 2016.
That number is already more than NZ population. That is only for newborn. What about the year 1 to year 5? One has to understand why A2 milk failed badly. It is all due to covid. Australian closed their door and the Chinese students went home. A2 rely on the Chinese students to sell on the daigou market. The Chinese students were earning big bucks before the covid lockdown.
So far, there are 40,000 China students in Australia and it is set to grow in Australia. There are Chinese students coming to New Zealand as well. That will be another daigou channel.
Do you think the company, A2 milk, is not tempted to use those students again? A2 milk is different from honey. There are so many types of honey in the world, however, there is only one A2 milk.
The challenge both the buyer/seller faced is that we kept hearing horrible news about China. Nothing good comes out from China until Chris Hipkins recent trips.
A2 is playing the long game and I believe their sales will grow.
Nice PR line - but I hope you realize that this is absolute non-sense? There are so many different milk sorts around, and even A2 milk can be sold by any Tom, Dick & Harry.
ATM might have A2 in their name, but it is not even trademarked. Its similar to Genesis Energy. They have the "Energy" in their name, but everybody is allowed to produce and sell the same stuff as they please. No advantage for them as well.
Anybody can hold A2 cow herds and sell their output as A2 milk .... and everybody does. As well, most of the milk sold from other animals (like sheep, goat) is A2 anyway.
A2 is just one milk protein which neither ATM nor anybody else holds IP for - it is just naturally occurring.
Yes, 9.56M still a huge number; but it will be all relative and based on a percentage market share vs competitors. Ultimately, there is now almost half as many babies (~customers) to sell too (in total) than there used to be. market is forward looking as well; so as this continues to trend down (and get worse), the market will likely take this into account. This will also have a flow-on effect to years 1-5 (so will be prolonged pain). totally agree with your thoughts around the daigou sales channel though; which has also had a huge impact.
Also it’s worth noting that in terms of competition… companies competing in this reduced market is also reducing. Abbots left with about 4% market share. The Chinese food regulation is very tough these days.Of about 200 applications towards SAMR only about two dozen would be approved (read somewhere must be NZ herald). It’s a tough market out in China and A2 is one of those very few companies which actually grew its market share.
Well, sure - Covid was the trigger for last times failure. However - Covid only could trigger the failure because management lacked quite basic management skills and the board was so deep asleep (or probably worse - drunk from the hype pushing the SP into the stratosphere), that they didn't bother to ask the most basic questions like - do we understand and manage our most important sales channel?
You need to understand whether you are investing into a lottery (which might bring some returns as long as Fortuna is smiling), or whether you invest into a professionally managed company with a board which identifies risks and problems before the earnings went already over the cliff.
Covid did show us that ATM's management and oversight is (well, used to be) substandard. Sure - Covid seems to be behind us (or we learned to live with the fatality rate), but what makes you believe that ATM is these days run by a better board and management?
Clearly a high risk investment, and not sure whether the potential returns are sufficient likely to compensate for the risks.
The risk for ATM and any other "foreign" infant nutrition brand is the domestic industry has become very strong, and good (learning from their overseas investments in plants) and the CCP is promoting local food. With secondary cities becoming the hotspot for births, the risk is they will do the patriotic thing and trust the CCP to keep them safe by buying local. Yili, Feihe, Meng Nui seem to be the real threat here.
It's worth looking into the ownership of A2 Milk company, and its suppliers of IF, you'll find that that goes a long way up the chain into CCP government. It could be argued that A2 Milk is a 'local' supplier. That could all change of course, but there are no signs that it will. A2 continue to grow market share in China.
Does this have any ramifications or just a bit of a nuisance -
a2 Milk Company loses trademark battle with Theland
The a2 Milk Company has lost a trademark battle after it tried to stop Chinese-owned Theland from using A2 in its infant formula brand. In 2018, Milk New Zealand Dairy filed an application to register two trademarks for its Theland infant formula brand, both of which included A2 on it. Milk NZ is the exporting arm of the Milk New Zealand Group, which, according to its website, has 29 farms across the country under the Theland Farm Group brand.
https://businessdesk.co.nz/article/f...e-with-theland
Prob paywalled
of course, anyone can have A2 milk herd.
having the herd is one thing, production is another.
It like saying everyone can have hives that have manuka honey, but producing it, branding it is another ball game. One needs to have the volume and all the 4Ps of marketing.
If it is so easy, Fonterra would have done it ages ago, given that they have their distribution chains all line up to the factory.
Funny statement. Are you sure you know what you are talking about?
Of course could have Fonterra done that - they choose initially not to go into A2, which may or may not have been a mistake.
And talking about the "production" - just in case you are collateral damage of the new science curriculum ... milk (whether A1 or A2) is produced in cows, and they know how to do that. Comes with the genes.
The processing (that's what happens after the milking) is exactly the same whether you have an A1 or an A2 cow (trust me, I know, we do have an A2 cow (a Dexter) :p; and milk her daily.
Any farmer can milk them and any milk factory can process the milk. A1 in, A1 out, A2 in, A2 out. Easy as.
Marketing does not seem to be too hard either. Just google "A2 milk" - plenty of suppliers around. My google search just delivered 9 products, only two of them related to ATM.
ATM used to have one nose ahead when the whole thing started (takes a bit of time to build up your pure A2 herds, otherwise you can't sell as A2) - but given that the average life of a producing milking cow is 6 years, this advantage is gone a long time ago.
I don't see any moat for ATM - they are just another boring dairy company with a substandard board, even if some supporters still try to pump up the hype.
https://www.japantimes.co.jp/news/20...-firms-age-up/
An excellent article. Talks about how companies are changing their business model by almost changing their target market from babies to older population… right from diapers and other adult “vitaminised” offerings…
I am hoping A2 follow suit in china before it’s too late.
That explains the somewhat subtle "Makanan untuk Orang Tua" lit. "Food for Old People" here.
Great thread. I pulled the trigger on this about a year ago. Now even on it. This is the most random, hard to pin-down NZ stock I know of. Might be time to get out... But they have so much cash on hand. Maybe I'll stay in...
Paying a dividend is tantamount to admitting defeat of their growth ambitions. The conundrum is that they do have a very large cash balance (albeit earning significantly more interest than a year ago), but little or no signals as to what they're going to do with it.
The share buy back was a token gesture to shareholders, it really meant very little given the number shares on issue. But at least it indicates that that the Board are conscious of shareholder dissatisfaction and doing something, albeit what seems a token gesture.
This is a sign of a very lazy balance sheet, a massive cash hoard, no debt, chasing growth through expanded marketing funded by cash flows. There is no doubt in my mind that the current PE (and share price) is already anticipating growth in new markets, but we have little evidence yet that is working.
They seem a bit confused about owning the whole value chain, versus their legacy of being pure marketing and a distribution/sales channel. It seems though, that they're leaning towards the value chain, owning manufacturing, supply, distribution, sales channels.
But this transition is very difficult for investors to value while they talk like a marketing company but behave like an end to end supply chain. One is aggressive going after market share, but the other is conservative building capability. Shareholders are probably a bit confused, understandably so as ATM seem confused also about what their future story really is.
When they sort out their new identity and communicate that is with evidence that it is working, I think this will be priced at significantly more than is presently. Until then, the market will look at the PE and other metrics and say, yeah, lazy balance sheet and no clear guidance on other markets, so price is what it is.
Meanwhile, the big holders, instos and the like, will game the SP as they have done for a few years now.
First glimpse at the new China Label due to be released in December.
A pretty mixed stock at the moment, the positive is theres more tourist coming to build up some milk powder, and the negative is China has a slowing economy and a declining birth rate, so naturally less demand.
Fonterra just announced that milk prices will be taking another hit dropping from $8 to $7 due to lower demand from China, expect a hit to ATM revenues.
"Fonterra Co-operative Group Ltd today reduced its 2023/24 season forecast Farmgate Milk Price range from $7.25 - $8.75 per kgMS, with a midpoint of $8.00 per kgMS, to $6.25 - $7.75 per kgMS, with a midpoint of $7.00 per kgMS.
Fonterra CEO Miles Hurrell says the revised forecast Farmgate Milk Price range reflects ongoing reduced import demand for whole milk powder from Greater China."
morgans say a2 sales growth for 2nd half will be very low
Normally low milk prices are good for their margins, aren't they??