http://www.nzherald.co.nz/business/n...ectid=10879401
Not sure if this is good or bad news for A2
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http://www.nzherald.co.nz/business/n...ectid=10879401
Not sure if this is good or bad news for A2
Time to buy.
Best Wishes
Paper Tiger
Someone just steam rolled the sellers at 60. Buyers now stacking up there. I've been waiting for this moment for 4-5 months!!
And there's 61. I smell blue sky in the not too distant future :p (although ATM has managed to prove me wrong nearly every time!)
The herald article relates to what I was talking about previously about only a few of the people selling infant milk powder being genuinely produced in foreign countries, rather than "processed"/"enhanced" in China. The creation of theNew Zealand Infant Formula Exporters Association is a response to that fact, but it is likely the market will continue to be flooded with "enhanced" product (even though the milk powder comes from NZ) due to the lax enforcement of rules in China and the corruption/nepotism that exists here. Chinese consumers often think of "NZ milk" as a single entity, hence the big scare of buying ANY NZ milk last year when the last scandal rocked.
A better approach may be for fonterra and synalit would be to get together and decide to stop all exports of their milk powders to companies which are producing infant formulae. That way they can produce/can the powder in NZ according to NZ regulations and sell directly in China. This may piss a few Chinese businesses off and be seen as anti competitive, but would most likely benefit them in the long term through being able to keep their reputation.
I aren't sure they will be able to convince the average Chinese consumer that a particular brand is better because it has some marking on the packaging as belonging to this group (which is what we do in the west with heart health ticks etc). And besides, as soon as such a marking comes out, it will be forged and put on the cans of the other makers to also include something very similar. Actually, my friend here told me, a lot of places pay to take the genuine infant milk cans back from consumers - the reason is clear as to why - the dodgy companies in China refill them with their own inferior product and resell them to consumers as the real deal at a higher price point. Sad but true, anything goes with Chinese business men. My Chinese wife also tells me there is a fairly new saying in China "Chinese people are the best in the world at killing Chinese people".
Well we are now sitting on the next major resistance and the all time closing high. It may not smash it today as it has already risen 5 cents, but I can't see the resistance putting up much of a fight!
Whatever it is, it is pretty to watch.
cashed out from lovely RYM with 263% return and bought ATM at 62c heavily. happy to see the price jump up only two trading days.
The Chinese Ministry of Agriculture, Mr. Han Chang Fu is visiting NZ now and signed an agreement with Nathan Guy. The first time for Chinese Ministry of Agriculture visits NZ. Nathan Guy will visit China after June.
The agreement is relatied to infant milk formula co-operation with Fonterra and A2.
A2 Chinese business partner, China State Farms Ltd is partially owned by Chinese Ministry of Agriculture.
It is encouraged by Chinese government, the Chinese stated owned company is considering buying NZ listed companies shares. China State FARMS lTD owns China Agriculture Resource (Trading Code:600313) at Shang Hai Stock Exchange and it is a proper company to undertake the takeover activities in NZ.
So end of day is $0.68 which is where it was six months ago.
It would be nice for it continue upwards from here, please.
Best Wishes
Paper Tiger
zhu ni hao yun, zhuan da qian PT :-))
Trondheim 1955 :-)
Where do people see A2 being in five years time?
Milk powder to China has blue sky potential but it would be suprising if its not taken over way before we are able to make really big gains. Given the history of this market anything half decent is soon taken away from us at too low a price
Sparky, have you bought in these again ?
hi guys, the online shop starts running today at http://www.nongken.org/a2/index.html, it can pre-order now.
a TV roadshow will be on mid of May and exhibitions in different cities between May and July. The sale starts from Bei Jing, Shang Hai, Guang Zhou, Tian Jing, Chong Qing, all large cities with population over 10 millions.
Hard to tell whether now is a good time to get in. Risk would certainly be increased. It has broken the resistance of 68 and we are now in blue sky, so it really could go anywhere. It looks like buyers have been outnumbering the short term traders/profit takers, so at a guess I would be expecting it to maybe level out at 75ish. But who knows, time will tell.
If it gets to 80 I will probably sell my entire holding. This would be in no way based on the company (infant powder should be huge!!!) but based on the fact that markets are getting out of control. Would just feel a bit more comfortable with a larger cash position for when the sh*t hits the fan.
So Sparky does that mean that summerset will not be affected by a big correction.
I'm actually not quite that optimistic, it was just a figure used for example - a bad choice as an example I guess.
I do concur on the liklihood of the likes of A2 (and what I term speculative stocks) being hammered in a big correction - hence these types of stocks only make up 24% of my portfolio - was less a few weeks back too.
Kind of interesting, within the last few posts we have had "the Sh*t hits the fan", a "bear market" and a "big correction" being discussed. Are all of these things the same thing? I don't see it that way, the way I see it is
The Sh*t hits the fan = big crash, 1987, -20% in a day or 3
Bear market = This is how I see this one
Correction = Well that's covered in that link too.
Given the above, I don't see either of the first 2 being likely in the next 3 years, but I'd be surprised if we didn't see the last one some time soon.
But I don't see a correction as an issue for investors. Traders, speculators - they very well may.
The reason why I say I don't see either of the first 2 scenarios for a ways off is because there is a recovery under way and it is being driven from the ground up.
For example, If the sharemarket were to crash tomorrow, Christchurch will still be rebuilt.
In past times (87 for example) the sharemarket crash dragged construction down.
This can't happen this time.
Fletchers are going to turn in a good result. Steel and Tube are very likely to turn in a good result. Their employees and sub contractors are still going to be getting paid and fairly well.
A huge portion ofthe country will be recession proof for several years to come.
America is teetering on the edge of an economic recovery and who knows within 3yrs Europe may even show signs of recovery too.
Japanese and USA are still printing hot money into global financial system. RBNZ would not lift up OCR till end of this year. still have few months safely to play if there is negative correlation between interest rate and the price of index.
The big correction would happen if USA suddenly tighten its monetary policy, and other countires fellow it. But now party is not over yet.
Mutual funds receive kiwisavers saving weekly or fornightly and keep buying shares, or keep a bit cash position. Look at RYM,SUM, DIL,DGL, EBOS, all in good trends. NZX 50 also in good position.
Enjoy the profit now, thanks for the bloody liquidity. Worry too much !
I would like to guess no!
I mean 24% last year and 12% odd already this year should be damn hard to beat.
But of course, (just like pre 87) when every man and his dog are in and bidding crazy sums on anything with a pulse all bets are off.
I know a lot of people (well 3 but when you consider the people that I don't know there must be many) who have opened accounts as a result of MRP and are "having a flutter".
Quite frankly, I'm hoping for a decent correction to stop this sort of behaviour in it's tracks now.
So yes I realise I may have to eat some of my words from my last post if this behaviour continues.
too early to out, hold for two weeks longer
MAYBE, people have realised its worth. Or did their maths.. Possibility.
Current PE and price to book ratio does not reflect future growth and fundamentals change. PEG ratio may explain everything
As the share price reaches the record high, it means a new record high would have later on.
A2 milk selling not good as other Fonterra products in NZ supermarket, the profit low. However, the infant power in China is selling at 80NZD with 300% return. NZ population 430million and Chinese population 1.3billion with a baby born boom.
It's difficult to do the math here, but the A2 fundamental changed. If a huge correction occurs, then the takeover would happen from their Chinese business partner, taking the advantage from the market.
It is a way for Chinese State owned company doing business in western countries, to avoid politician risks, sharing the profit or relief the pressure from products price increase. They never short of cash to buy overseas assets. The NZ dairy assets would be hot after John Key April China visit. the two gaints Yili Diary and Ya Shi Li Dairy announced that they will invest in NZ. the proposals have been approved by NZ government.
More example in Aussie mining industry, USA oil & gas, technology industry , few examples in NZ, such as F&P, Synlait Milk, but it must be dairy industry.
What's up with the ATM depth? The 75 cent sells have a 'u' in front of the number of shares on offer, and don't seem to update when someone buys them. Not ideal when I'm looking to sell... (On ANZ/DB).
+u - Limit orders can be placed onto the market with an undisclosed quantity.
The undisclosed quantity of the order must be value equal to or greater than
$100,000.
Well I sold up. Still like the stock and will watch with interest, but I don't think that this price can be maintained and we will be seeing a drop soon. Maybe I'm wrong though. For the sake of those still holding I hope it continues charging!
u is approxi half million share, now has been eaten. Some big guys are hidding behind the bids
not much knowledge about this company, but these figures( EPS 0.31c, NTA 7.25c,PE 235.48 )hold me back, hope their products sucessfully landed in china.
It's a great company. They are still in a strong growth mode, so EPS is small (although positive) as they are spending heaps on growth. I got out the other day as I saw it as fully priced and likely to drop somewhat. May buy back in in a few months time if its looking cheap. If you are in it for a trade, I'd be selling right now. If you're a long term investor then probably best to just hold on tight assuming the story continues to be positive.
Another positive mention for ATM today in the Synlaits's press release - $15m plan upgrade. Sorry having trouble putting the link on this posting. Perhaps someone to add link from NZ Herald or Synlaits website
good news arrived, but price down. classic
agree, waiting again for buying signal.
I sold because I jumped into other boats, like DGL and WHS, then will jump back on ATM again. I do not think this time the price will down by more than 5%.
efficiently use the money,mates
orginally thought the PS would reach between 78c and 82c, but the big guy jumped out and sold at 75c, the buying power reduced. got the chance cashed out at 74c then bought DGL and WHS, which have a gain around 5% currently.
People on this thread are so price sensitive, just relax, ignore the daily noise and wait for the white gold to work its magic. China and its demand isnt going away
Wait, watch, not now.
Just yet another good reason to buy ATM on the dips.
http://www.stuff.co.nz/dominion-post...xports-booming
Quite a fall today and with the highest volume of the last month.
I wonder if articles such as this from today's Herald are part of the cause.
Anyway it had better get it's act together or this will not be a long-term investment.
Best Wishes
Paper Tiger
Dipping on big volume too,but I think maybe just trading in a range,until more positive news.
Possibly media influenced, in conjunction with a technical trend and re-test of the MA50 following what was a relatively confident SP recovery earlier in the year post the capital raising and dilution.
According to the Ministry of Economic Development, the Chinese infant formula market is worth over NZD 7.43 billion (2011), of which NZ contributes around NZD 1 billion per annum. They project that this market will double by 2016.
One would hope that the Ministry of Primary Industries and New Zealand Trade and Enterprise would adequately resource the protection of what is a major growth prospect for the sector. At least protect matters at this end of the supply chain. Who knows if China can ever be influenced on this matter or any other ?
There is just absolutely so much up-side potential for ATM in this market, I would not be concerned about short term moves in SP.
While I am/was a long term investor in this one, I am very aware of the huge risks. China is without doubt the biggest growth market for ATMs products and articles like the one PT posted above have potential serious consequences for the industry. I therefore put this stock into the same risk portfolio as where I used to hold DIL a year or so ago. Huge potential uptrend but lots of unknowns.
I am with PT. This was initially a long term investment for me but the silence from the company doesn't give me much confidence. Presently I don't know whether to buy more or dump it !!!
It would be of really great interest to hear from someone with on the ground knowledge of the market place perceptions in China, not something I can assist with having never been there.
Is it possible that ATM with a marketing edge above other non A2 brands may be perceived as the 'best of breed' ?
Is it possible that ATM may even benefit from short term industry safety and quality concerns as one of the top quality and therefore trusted go to brands ?
Thanks, but can you please explain what you mean, I am just a Junior!
Great Thank you!
Before we get all over exuberant do we know what the market cap of this company is at 60 cents and where it needs to go to justify that. Its not as expensive as say XRO granted but its getting up there...
I know its no XRO but... you would really need sales in excess of $387m to justify a 60c share price... so... when is that going to happen and how. That is the question I have for this company. WIll see, am still debating whether to take a nibble :)
I know Moosie.. sorry I was too brief, I was talking about future revenues. Didnt convey that well enough I guess. What I am saying is I find it difficult to envision where ATM is going to get that amount of revenue from in the future. It probably is there,but they are going to have to do a lot of work. Will keep watching and may buy in at some stage. I like their product (A2) and can see the markets emerging, but my fear is they cannot keep up with demand.
Hi all, Chinese government is considering a trade barrier for foreign infant formula. Now they are working on the wine barrier for French Wine products and Chemical products from Germany, for the next stage, it's turn to NZ milk products. Already gave signals on Chinese National TV Channel.
Because the non-Chinese currencies depreciated, it may cause some trade wars to against "dumping" among the big economy countries. Such as current Euro anti-dump plan against Chinese solar products.
I am more happy to see how the marketing promotion is going on after A2 infant products arrivals in Shang Hai. Need to two months to figure out.
http://www.nzherald.co.nz/business/n...ectid=10888405 Nice reassurance for A2?. I hope the link works if not just copy and paste it in your browser.
Anyone know how much formula ATM have ordered from Synlait ??
http://ruralnews.co.nz/dairy-news/da...omestic-launch this should answer your question
This will hopefully continue to provide some confidence that the ministry are actively now addressing matters.
It's all up from here.
http://tvnz.co.nz/business-news/milk...brands-5466478
ATM has provided guidance that they are “on track to achieve FY13 EBITDA of $11.2M before intercompany charges”. We also know that ATM have stated publically that they anticipate FY16 revenues “to be at about $280M”. This is around 3 times the anticipated FY13 revenues and if you do the math represents average forward revenue growth of about 45% per annum over the next 4 years.
This is recent but not new news, but how must we assess top to bottom line margins.
ATM’s average margin over the last two years has been 6.5% and we should anticipate this to improve further as the company grows and gains further efficiencies. A present margin of 6.5% is not bad with in a low margin industry, Fonterra’s HY13 margin was only 4.9%.
ATM operate in a global market, have a value added product above their competitors, yet contract a good percentage of their production and have entered into difficult to assess joint ventures.
Have any posters a studied expectation of forward ATM margins ?
Fonterra announced that its Anmum brand will start to sell in China this year. Competitiors for A2 one by one.....
Presentation by Geoff Babidge, CEO, to the 7th Global Dairy Congress in Lucerne Switzerland
19-20th June 2013.
Highlights:
AUSTRALIA:
· In Australia, approximately 25% of consumers are dairy sensitive or intolerant
· 718% growth in the Australian market since HY2008
· Significant price premium over other branded milks and, c.150% premium over home brands
UK IRELAND & EUROPE:
· Joint venture with Robert Wiseman Dairies in the United Kingdom and Ireland. RWD is largest UK milk processor
· Launch of a2™ brand fresh milk into the UK from October 2012. Initial listing in 900 outlets nationwide
· Opportunity to expand the product portfolio in other European markets
CHINA:
· First shipment of infant formula product to be on shelf September 2013
http://www.noodls.com/viewNoodl/1909...-presentation-
Check out the Australian revenue growth curve within this presentation. If ATM achieve similar growth in their other markets this could all just take-off.
I’m also encouraged by the 150% price premium which is beginning to satisfy some of my assumptions on what top to bottom line profit margins ATM will ultimately achieve. ie: what the A2 marketing premium is worth over and above their non A2 competitors.
Mac
Thanks for posting this Mac. It is hard to get much info on progress with this company so I appreciate anything like this, good or bad. Am reasonably invested in ATM and my gut is telling me to accumulate even more, but hard on this information vacuum.
It's good to see a concise consolidation of the scientific and medical research as well, more so than I've seen previously.
I'm also quite curious about such a bold statement by Geoff Babidge in the presentation summary, wow !
"Further scientific developments may drive step change in awareness and public support. Potential for a2™ brand to become the global default milk"
Unheard of in our youth because as you say A2 milk was the norm.
Lactose intolerance is a modern day illness and in most cases is very difficult to diagnose accurately.
Until now, I think it is has really just been a convenient way of hiding the fact that it's the BCM7 creating the problem.
As far as I know (in other words what I can glean from google), the A1 mutation occurred around 5000 years ago. Older breeds of cow such as Jerseys, African and Asian breeds give mostly A2 milk while the black and white cows Friesian and Holstein give A1.
As a kid I remember my mom telling me to drink Jersey or Guernsey cow milk because it was the best. Was there wisdom in this old wives tale?
If the milk you were getting as a kid was mostly A2...has the national herd changed? Were there less Holsteins in the past?
Agree that ATM is looking well oversold now, like a lot of other stocks at present I guess. The SP bounced off support at 60 cents on Friday, MA200 is also 60 cents. We may see a levelling off about here.
Cautiously looking at the charts again today, we may be seeing some consolidation now and a re-continuation of the upward trend line. If the SP breaks resistance at $0.63 within the next week I'd be comfortable topping up at these over sold levels.
Nope and I don't own a crystal ball, but when stocks are oversold and the fundamentals are good one has to try and decide when ?
I think you are right about the PE coming down KW.
Credit where credit is due. The fact that a high tech start-up is generating a profit lifts it above 90% of other high tech start ups immediately in my eyes. However to suggest that something like 60c is 'value' in any valuation sense is way over the top. Paint a growth story big enough and any price can look like value to those will starry eyed glasses. I guess if A2 takes off in China, then todays' shareholders will indeed be well rewarded.
However, of greater relevance from my perspective is, why hasn't A2 taken off in New Zealand? This is warning sign to me that no market is a 'done deal'.
Next if you read Professor Keith Woodhouse's blogs on A2, you will see that although containing A2 apparently means that such milk can be consumed by the lactose intolerant, he is not sure why. Possibly something to do with slowing down the digestive tract process is his best guess. But there are other ways to do that. And of course there are other milk substitutes (soy milk, rice milk) that may be better for lactose intolerant people.
What I see with A2 milk is a one product company with probable health benefits, of which satisfying the demands of the lactose intolerant is not one, which will face huge marketing headwinds. Their success in Australia is admirable, but success in other markets must be earned. I believe it is very unlikely that A2 milk will succeed in every market it tackles, and there will be opportunities to pick up shares genuinely cheaply if the boat rocks.
At 60c I would consider A2 grossly overpriced, and with the exception of one or two software shares, the most expensive share on the New Zealand market, period. I will be looking to enter A2 at some stage, but I won't be paying any more than 20c for my A2 shares.
SNOOPY
Snoopy, ATM have a plan to enter the NZ fresh milk market, have a quick look back at their last few presentations. As I understand, It’ not so much that A2 milk hasn’t taken off in NZ, it’s more that ATM own the IP and have been reserving significant entry thus far while they tackle larger and more lucrative global markets.
Growth stocks are not easily valued and PE shouldn’t be considered as a primary tool in isolation at this stage in a business cycle. Unlike other start-ups in the dairy sector at present ATM is both investing heavily in growth, and, also generating modest profits at the same time, hats off to them.
Average revenue in the last two years was 45% and if ATM meet their expectation of achieving $280M in revenues by FY16 then this also provides us with a forward revenue growth rate of 45% for the next four years.
The challenge in valuing ATM, as I see it, is in estimating where forward top to bottom line margins will ramp up to over the next few years.
ATM have a unique business model with a mix of direct production, contract production, joint ventures and direct sales which does make it difficult to assess forward profitability. However, the common thread is the additional margins generated by owning the intellectual property and through having a niche product which demands a higher over the counter sales price above and beyond all their competitors.
It would seem that most would value ATM higher than yourself, each to their own, but I suspect you will be waiting for a very long time indeed if you really do expect to see ATM at $0.20 or anywhere near to it.
Mac
This from Geoff Babidge, MD, "The reason the business in New Zealand is pretty modest is that some time ago, prior to the recent shareholders and board of management, the company issued a whole raft of licences to small operators. That model proved not to be particularly efficient,"
In New Zealand, North Auckland dairy company Fresha Valley has the licence to produce homogenised A2 milk in one and two-litre containers.
Thanks for the explanation on the failure of A2 to develop in NZ, Biker and KW. I guess this shows the importance of choosing the right partner(s) with which to roll out your product. My point was that with a PE of 80 you are pre-buying assumed success which may not roll out as you anticipated.
Look at all the enthusiasm that the market greeted the involvement of Agria providing a channel for PGW to sell their seeds into China. That enthusiasm saw PGW shares soar into the 45c range. Yet when it became clear there are no quick dollars to be made in China PGW shares lost more than a third of their value. I don't think many people would argue with the pure quality of the Methven plumbing products. Yet they have had a terrible time trying to break into the UK.
My point is just because you have a great product, that is not a licence to print money overseas. IMO A2 faces huge market development risks that are not at all reflected in the share price. That doesn't mean I don't wish them all the best for the future though. But from a risk return perspective I think a share price at anything higher than the last cash issue price is too high at this stage of the development cycle. And if anything does go wrong, the share price is likely to retreat towards the 20c that the shares were trading at before the recent market euphoria.
SNOOPY
Yes, it was the fact that a growth company was actually generating profits that grabbed my attention in the first place. Personally I would never consider investment in any company that has never made a profit, although I recognize that other investors have different perspectives.
It is very easy to convince yourself of high values if you use extrapolation as an investment tool. Somehow I doubt that revenue will rise 45% in Australia even this year. A 45% rise in revenue for A2 may indeed be possible, but it will take hard work in new markets to achieve it.Quote:
Average revenue in the last two years was 45% and if ATM meet their expectation of achieving $280M in revenues by FY16 then this also provides us with a forward revenue growth rate of 45% for the next four years.
It sounds like A2 have learned from their 'mistake' in the way their NZ market push was handled. I agree the A2 intellectual property is the kind of 'moat' I look for in evaluating new investments. So there are definitely some positives there. The risk here IMO is overpaying to gain exposure to the business. Not that the product is no good.Quote:
The challenge in valuing ATM, as I see it, is in estimating where forward top to bottom line margins will ramp up to over the next few years.
ATM have a unique business model with a mix of direct production, contract production, joint ventures and direct sales which does make it difficult to assess forward profitability. However, the common thread is the additional margins generated by owning the intellectual property and through having a niche product which demands a higher over the counter sales price above and beyond all their competitors.
SNOOPY
I’m not sure the rest of us are seeing any euphoria.
What we are clearly seeing is steady well managed growth over the last three years as the company progressively de-risks and is now reliably growing revenues at 45% per annum based on ever improving models for monetising their intellectual property.
ATM estimate this growth rate will continue for the next four years as they enter new markets and they appear to be walking the talk. The next step in de-risking should occur when we receive sales reports from the 900 outlets in the UK.
I respect bearish views, they keep us all cognisant, and I wish you luck in your endeavour in wishing to enter at 2011 valuations.
Attachment 4624
Hmmm...Mac you quote 45% pa annum growth and I see your chart is showing a 644% price increase over 3 years...That's an unusually rapid uptrend don't you think? A Share price uptrend well ahead of its fundamentals with no long pauses and no healthy corrections???.....I can why some people would take a bearish view...eh
I agree with you hoop, I also equally think that a suggestion of a 320% correction to a share price of $0.20 is rather perma bearish.
Note too that it’s 45% revenue growth p.a and ATM are investing heavily like other growth companies to achieve future NPAT. The SP needs to be justified by analysis of forward NPAT manifesting from this high rate of investment. Consideration of future margins is also important.
A2 milk now selling yoghurt in the OZ. This from there facebook page about an hour ago.
"Did someone say Yoghourt? a2 Jalna Natural Low Fat Creamy Yogurt comes in 1kg tubs and is available at Coles and leading Independents. ‘Share’ the word!"
I do agree ATM is very expensive. But the overall NZX is not that expensive, therefore I reckon ATM SP still have room to go up until market get crazy.
If ATM is down to below 20C, it's either the Company fundamentals incur serious problems, or the overall market crashes.
I’m continuing with a bout of positivity for ATM, there's just so much negativity in the world to balance.
This is encouraging from the UK;
Tesco are retailing 2 litre bottles of A2 for £1.99. This compares to Tesco’s home brand 2.27 litre (4 pint) bottles retailing for £1.29. Also, seems to be a promotional sale at present of two bottles of A2 for £3.00, all the better to kick things along.
http://www.tesco.com/groceries/Produ.../?id=275206388
It’s an interesting price point as it appears to have equivalency with the selected Australian premium of 150% times home brand retail prices, and therefore probably very similar margins.
Perhaps we will get some initial indication of sales volumes at full year reporting, 9 weeks away.
It would be nice to see the UK venture de-risking like the Australian operation.