I see it as positive that Dean Foods is out. Was never in favour of takeover, ATM has got much bigger potential in coming years and would rather that the we reap the benefits.
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I see it as positive that Dean Foods is out. Was never in favour of takeover, ATM has got much bigger potential in coming years and would rather that the we reap the benefits.
There we are....Trading Halt!!!
So the article came out last night, and they allow 32 min of trading before a trading halt? That stinks if you ask me!
You may like the long term prospects of holding this stock without the takeover bid, but short term this can not be good for the SP, surely! Traders out who were betting on a takeover (SP down) and ensuing capital raise (SP down). Not good if you ask me....
Oh well just a matter of time until some Chinese businessman picks the whole lot up at a discount
Trading halt to be lifted soon, not much in announcement other than the news about Dean Foods position. Nothing on capital raising....let's move on...
I'm a little confused by your comment. I would have thought last nights article warranted either a statement before market open or a trading halt if they couldn't get their act together in time.
It seems ridiculous to me that they allowed a 32min window to sell before they acted.
My memory is a little hazy on ATM but hasn't this happened before in a similar form?
My theory is that the NZ market misunderstood this comment from Freedom CEO Rory Mcleod in yesterday's SMH article, (as posted this morning by 'lolgza'):- "The company and Dean Foods have ceased detailed discussions in relation to a2," Freedom said". The "company" is Freedom Foods - not a2MC. The ceasing of detailed[!] discussions may have something to do with Dean Foods being investigated for insider trading, whatever, I think a2MC moved to stop the freefall (8.6%) with a short TH and then clarify the situation with the 'Update on EOI' released at 12:03 NZ time, stating: "Although there has been no formal withdrawal of the Expression of Interest, the Board continues to consider that no takeover offer is imminent". Note that a2MC have stated that 'no takeover is imminent' right from the first announcement of an EOI.
It was a bit confusing over here in Oz, because the ASX suspended trading without a TH announcement. The first trade (0.605c) was at 10:21am after the 'EOI update' at 10:10am.
The lesson here is to read articles in the press carefully. Those who sold at 64c this morning may be regretting their decision. I trust only what the company announces.
I have to agree with you blundoon. I could not have sourced any more negativity than was inherent in the SMH article. They even delved into FF's last annual statement and pulled out the "a2 holding potentially on the block for sale" or words to that effect line, and the "perich unimpressed with latest results" line. Throw that in with FF/Deans deal "abandoned" and you would go rushing to drop your shares immediately as if the company had no future.Quote:
The lesson here is to read articles in the press carefully. Those who sold at 64c this morning may be regretting their decision. I trust only what the company announces.
The statement about reviewing a2 shares for sale is nothing new. As a prudent person you could logically say that about any holding anyone had. Anything is sellable at the right price.
Happy to be guided by the company's forecasts rather than the media's assessment.
I have been commenting without introducing myself. Originally from Wellington NZ, I have lived in Oz for quite a while, but travel back to visit family regularly. I have been a holder of ATM since May 2012, (and now also A2M), buying several parcels over the years. Like many of you, I've become a huge believer in the science of a2/a1 beta-casein in cow's milk, and therefore a consumer as well - haven't tried the ice-cream yet! I feel sorry for you in NZ with the limited availability of the products at the moment.
I would like to thank all the contributors to this forum since I joined a year ago - your research and comments have been very informative and helpful. I've been investing for over 10 years, but always learning. In particular I want to mention NT001 for his research, insights and knowledge of the dairy sector. NT's reply to 'xafalcon' on 22 Jan 15 (currently #2602/2603 on page 174 - this changes as comments are deleted), was absolutely brilliant, and dairy tech expert 'xafalcon' was never heard from again!
Comparing this forum with HotCopper, I miss not being able to give a thumbs up or down to a comment, and it is handy on HC to see if a poster is a holder of a stock and their investing sentiment. Of course some down-rampers and negative nellies are quite obvious by their comments, and it all adds to the mix.
As you can see, I don't mind a chat, but I will try and keep my posts to useful stuff. I'm now a subscriber to 'The Australian' online, (excellent Business section), so can copy-and-paste any relevant pay-walled articles to this forum. Good luck to all!
Yes Harrie, the headline plus other comments were misleading in my opinion, however, I had to chuckle at this comment: "Freedom was believed to be underwhelmed by a2's full-year financial results, despite it reporting a 40 per cent surge in revenue and being broadly in line with analysts' estimates." FNP's FY15 revenue rose only 4.1% and their underlying net profit fell 60.3%!
I should disclose that I am also a holder of FNP - originally because of their major stake in a2MC, and was very happy when they signed the A$500M deal with New Hope Dairy. They have always stated in their presentations etc; that their stake in a2 was 'strategic'.
Thanks for your comments over the last year. Cheers.
Ah well, with all that media speculation, where did the SP end up?
The fact that Freedom-Perich are no longer talking to Dean Foods about jointly taking over a2MC is a positive, not a negative. It puts Dean in a better position to cooperate with a2MC in rapidly expanding its new US operation, while Freedom and Perich focus on China. Dean is the right kind of partner for a2MC, with a big dairy marketing infrastructure in the US and a preference for catering to top-end consumers interested in "healthy" dairy. Dean Foods has a policy of very tight quality controls over its farmer suppliers, backed up by sample testing of their milk, and I see it as becoming involved somehow.
The media are carelessly wrong, IMO, in suggesting Dean Foods has been "derailed" from a deal with a2MC by the investigation into alleged insider trading activities by its former chairman, Tom Davis. It's Davis who is under investigation, not Dean Foods - and he's gone. And Dean Foods has already said publicly that the investigation does not affect any acquisition or other corporate plans it may have.
I'm betting on (and looking forward to) a capital raise announcement soon to fund the US operation. I believe, as Geoff Babidge seems to, that the US is the market offering the best returns while a2MC's full package of patents remains in force.
I also expect a very interesting announcement soon coming out of a clinical trial of Chinese consumers. It will (I am sure) back up the Curtin University research showing consumer experience from drinking A2 milk is markedly superior to drinking standard milk.
Bring it on.
Maybe they didn't immediately halt because they're not actually saying much new? We were told on the 20th of August there had been no further discussions since the update on the 20th July, nothing has changed as far as A2 are concerned apart from another couple of weeks with no discussion as far as I can tell. Maybe they felt compelled to release a statement because of the morning's trading, rather than because of anything material changing?
Interesting piece here on the Chinese infant formula market out of Australia. Not sure whether the A2M figures given in the final paragraph are new, but certainly positive.
http://www.smh.com.au/business/retai...03-gje6kp.html
Up three cents on the NZX so far today and about the same on the ASX with some reasonable volumes traded. In Oz the SP actually rose from 62c early this morning to 67c a couple of hours ago. Something going on?
This may not be everyone’s idea of light or even useful reading, but for anyone interested in the Indian perspective on the A1-A2 controversy, this is a good article by three Mumbai academics. It illustrates the growing view that raising and milking non-A2 cows (which are foreign to India) should be banned. India is the biggest milk producer in the world, and milk (bovine and buffalo) is a more important part of the diet there than in China, for example. And originally all breeds of milking cow in India were A2. There are articles like this pretty well every week in major Indian media now.
<http://www.fnbnews.com/article/detnews.asp?articleid=37729§ionid=1>
http://www.smh.com.au/business/retai...03-gje6kp.html
Something to do the above may be....
It has all gone quiet..... Yet $8million+ through yesterday, and $500,000 pending today (International) Something has to be happening somewhere....
Watch out for any SSH to be released on NZX in next couple of days. Surely something's cooking behind scenes!!!
Might be a prelude for cap raising
Not strictly relevant to A2, but this article by Keith Woodford is certainly serious food for thought for those interested in the future of NZ's dairy industry, and especially the relationship with China which is heavily based on whole milk powder (WMP).
https://keithwoodford.wordpress.com/...ket/#more-1355
Just happened to pick this up while reading NT's article above from prof Woodford which I think those new to the post should read.
There is some pretty compelling evidence against a1 beta casein here.
https://keithwoodford.wordpress.com/...sein-evidence/
Well, looks like Perpetual accumulated another 6ml shares between 1-8 sep. Notice issued to ASX late in the evening. Explains the hug volume of trades in the past few days.
Perpetual buying for the same fund profiles as before on behalf of international clients. These are specialised SRI and ethical funds, small growth companies in Australia, and companies that are developing strong brands and that have international growth prospects, positioned in a growing market sector (health).
They have just picked up another 1% of the company and I don't think they will stop there. I suspect they will go the same way as Milford did and will keep building the book and improving the price as they go. ( They will want to protect their mandate with their intl clients...failure will not be an option which will mean that they will take as many shares off weak sellers as it takes to keep the price around these levels and above)
As a significant institutional player, others will start to do their own research (they don't like to be left behind in the performance rankings) and if they come up with the same conclusion, watch the action....
The SMH article reminded, I wonder if/when A2 will try organic A2? I guess they should focus on the basics for now.
You're correct, best to focus on the basics. Actually, an organic company in Canterbury did have a licence to market A2 milk in NZ but it's no longer doing so, probably because it wasn't viable commercially. At the time, several years ago, I wrote to ATM making the point that it was very confusing to consumers because it seemed to suggest that the "healthy" point about A2 was that it was organic. It was a distraction from trying to explain the true difference between A2 and A1, which has nothing whatever to do with organics. I think a2MC probably realises this now.
The organic A2 was available only through organic and health product outlets, probably not a big enough market to be profitable. By the time a company has met all the requirements to be registered as organic, PLUS the requirements to guarantee its milk is pure A2, PLUS paid a licence fee to a2MC, the retail price would probably not be very attractive to consumers - or retailers.
I'm not sure that BAL has progressed quite that much KW. They have gone from around A$1.80 to A$7.60 in the last year, so around 320% increase on my calcs. Nevertheless a whole heap better than a2mc, but they are a more diversified health product producer so not all that growth in SP is predicated on baby formula. Having said that, the growth in a2 baby formula has outpaced BAL in the last few months according to SMH as shown in the graph :
http://www.smh.com.au/business/retai...03-gje6kp.html
I'm wondering if supply is becoming an issue for a2mc?
If supply is an issue, it would make more sense as KW has suggested to produce baby formula and sacrifice the fresh milk supply. There seems to be an endless demand for "healthy" baby formula.
I think supply is going to be an issue for quite a while in several markets. But I'm inclined to think on balance that there are significant advantages in continuing to supply plenty of both fresh milk and formula in Australia. One of a2MC's strong selling points globally is that it has captured 9-10% of the Aussie fresh milk market, and that could rise further.
The Chinese in particular like to know that the product they're buying sells well in its "home" market. This would include selling to adults, not just babies.
It also makes Australia a good place to monitor the health and digestion effects of A2 - there's a good pool of literate adult consumers to conduct research on, whereas it's harder to do research on babies, especially Chinese ones.
And when farmers in the US and UK see what can be achieved in the Australian market they're more likely to switch to A2, which will help solve the supply issue. Switching involves some extra costs and work for farmers in the initial stages.
Ok KW on that basis its a 474.44% increase to be precise, but lets not get bogged down in the detail, its an extremely impressive rise, in fact anything over 20% in a year is what you could term as a stellar performance!
I hear and accept what NT is saying, but I am persuaded by the immense opportunity to concentrate on the baby formula especially when I look at the trajectory of a2's growth in the last few months, if it is a matter of supply.
You could however argue that a2mc is fairly new in the market over there in the supply of baby formula so growth is from a low base, but it looks to me that the growth is primarily predicated on the idea of "health" as is Ballamys "organic" milk especially when comparing the relative success of both of these brands to other brands not associated with the "healthy" label.
Many Chinese wouldn't understand necessarily what was "healthy" about a2 milk, so the brand appears to have successfully created that perception already.
No, it has gone up 4.75 times. You could say the price is now 5.75 times what it was a year ago, if you insist on using 5.75. (i haven't checked the maths, I'm just assuming the numbers are correct)
But back to the real issues.
So they're doing well in Aus with baby formula. Do we know how much of that is being sold for babies in Aus, and how much is being 'exported' for babies overseas? If the former, great. If the latter then I wonder how much is being bought for export as an A2 product and how much is being bought just because it is on the shelves? If the latter then it might not take much for it to lose it's popularity.
I must admit that's a point I have recently pondered as well. I suspect both actually, otherwise the growth against other brands would not look as impressive. The message is getting through albeit slowly. Need the results of the research project being conducted in China to give it a kick along.Quote:
I wonder how much is being bought for export as an A2 product and how much is being bought just because it is on the shelves? If the latter then it might not take much for it to lose it's popularity
[QUOTE]So in the UK and USA where they are struggling to get traction with fresh milk sales (with its niche specialty milk designation) it might be of more benefit to launch the A2 formula there instead [QUOTE]
What evidence do you have that this is the case in the USA KW?
[QUOTE So in the UK and USA where they are struggling to get traction with fresh milk sales (with its niche specialty milk designation) it might be of more benefit to launch the A2 formula there instead [QUOTE]
What evidence do you have that this is the case in the USA KW?
Seems contrary to the scores of outlets already opened across the U.S.A which are supplying a2 fresh milk. This is seen on the USA A2mc website.
This is now more than just a Southern California toe dipping deal.
What will be the next catalyst for ATM share price growth? Maybe a trading update? Share price showing good resilience at the moment in my view.
Hi QFD, the thought of a capital raising will be weighing on investors' minds.
Maybe so, airedale, but I agree with QFD Sage that a trading update is likely soon, which will be very positive, given the recent expansion of sales outlets in the US plus the very interesting details about A2 contained in this week's FY report of SML, which have not so far attracted much attention.
Plus, we now have this report from the UK that suggests things are going ahead pretty quickly there.
<http://www.thegrocer.co.uk/buying-and-supplying/new-product-development/milk-brand-a2-launches-two-long-life-uht-cartons/525028.article>
I have seen nothing to suggest a failure to gain traction in the US and UK as suggested by KW.
Maybe so NT, it may work like this....a positive trading update to stimulate interest and boost the SP and then the capital raising.
They will have to give a trading update before the capital raise. Anything but a positive trading update and the result could be quite the opposite. Things have got to go very well for a number of years to get to an NPAT of $40m which would be a decent return for the current share price.
From sml report.
In the last year we have seen this customer gain significant momentum with their infant formula business and we also began producing a new whole milk powder product for the Australasian market. Their growth indicates they will soon be a leading infant nutrition and powdered milk brand in the marketplace and we’re pleased to have increased our milk supply in FY15 in response to their success.
Yes KW, but I wouldn't want the company to completely change its strategy and become a one-trick pony on the basis of relatively small revenues from fresh milk sales at the start of operations in the UK and US. It was easy to make quick money in a currently hyped infant formula market but markets are fickle, and one thing I liked about the UHT announcement in the UK was that it shows the company is doing interesting things that we don't even know about, testing the market for a range of A2 products.
I was also interested to note Wotherspoon is now CEO for both UK and China, which possibly suggests some of the British-made UHT may be destined for China, although initially they were saying it would be the company's initial product on the EU market.
Looks like someone is quietly accumulating in the past few days..Perpetual again?
Hope they're right! TPP deal positive on the infant formula front also.
67c is a very small discount to the market price. Why would Goldman Sachs New Zealand want to underwrite at that price? Perhaps no interest from the Australian market institutions, despite the recent listing there?
For the larger retail investors, the $15,000 small shareholder application ceiling is a nice bit of shafting for their loyalty.
SNOOPY
The limit of $15k is the maximum due to listing rules. Only $3m means scaling will be major as only 200 shareholders will be enough to get it to $3m
The biggest piece of market news for weeks and the silence is deafening. The CR has been well signposted so perhaps there is not much to add.
-GS no doubt get a fee, and have probably sounded out the market to see what demand there is. A high price indicates good demand hopefully.
-Depending on your definition of a small shareholder, they would probably get less than $15k in a pro-rata issue. So I don't see the $15k as a shafting. Shareholders can always try their luck with GS if they want more.
-$3m for the existing shareholders does seem a bit mean. So with the scaling it could be a shafting to the small shareholders.
Remember 67c is floor price, depending on demand it could be higher. Contrary to what you said, I pick that demand from Aussie instos would be very strong and high. It'll all be snapped pretty quickly. Pity existing holders only get a paltry $3 ml take.
Unlike in many share purchase plans, I suspect this will go higher after placement.
There we've it, all placed @0.68c must be very strong demand.
Big volume and sp is strong too. 80c soon I reckon, wait till ASX open and it'll go even higher.
I think SPPs are not as fair to all shareholders as a pro-rata renounceable rights issue. However they are quicker and cheaper and this SPP seems to have been well received. The way professional investors have taken to it has produced a fillip, that perhaps may not have happened with a regular rights issue. In that way all shareholders benefit I suppose.
And it opened at 72.5c (+11.5%) on the ASX. BOOM!
On the move again , 83 cents ... Maybe still in play ?
Yeah, looks like the sp has just exploded. Strong demand from Aussies I reckon...up and up!!!
Expect huge scaling for the public pool of (paltry $3Mln) when it opens later.
Hi all. Interesting and positive trading - very solid volumes. My guess also is that some of the Aussie instos are building positions. Does anyone have any idea on how the SPP scaling will work? Some of these SPP schemes are very poorly designed. To get your maximum entitlement I suspect you will have to pay 15k, and await the inevitable scaling. Get your paltry number of shares + a refund cheque (no interest no doubt!). Is it worth the hassle? In the meantime, enjoy the ride. Next target 90 cents...end of the week?
a2 vanilla and chocolate ice cream has hit the shelves locally! Priced at AUD $10 per 1.8 litres. It has a full page advertisement in the Coles weekly junk mail and 20% introductory discount this week - will let ya'll know how it tastes!
Suspect that there may not be as much take up of this as expected as a2 seems to be associated with the "healthy" tab, whereas most of their buyers of fresh milk might think that ice cream is associated with unhealthy ie too much sugar. Limited market therefore.
IMO would prefer it if they concentrated on the baby formula and fresh milk which is where most of their demand is coming from.
I agree also - but hey its happening, and management seem have a pretty good track record with their judgement til now. Is ice cream big in China?? The Chinese / Taiwanese i know smash it!
Nothing unhealthy about sugar or fat per se, provided eaten in moderation as part of a balanced diet. A2 ice cream may well mean that some people can have a tasty treat that will be easily digestible compared to regular ice cream. I think it is great that A2 is expanding its product range.
So what happens now with spp. Do we go a-knocking on their door. Or do they post out an application form to all shareholders?
A wee way off yet ....
The record date to determine New Zealand and Australian holders' eligibility
to participate in the share purchase plan is 7:00 p.m. (NZ time) on 7 October
2015 ("Record Date"). The offer document for the SPP will be distributed and
the offer is expected to open, on or about, 3 November 2015. The SPP will be
open for not less than 12 business days and is expected to close at 7:00 p.m.
(NZ time) on 19 November 2015.
I agree that ice cream (like yogurt) is a diversion from the main thrust of the a2 message. I'd sooner see the company stick to its main strengths, namely liquid milk and infanct formula, but from a marketing viewpoint it's pleasing to see it is testing other product areas as well.
In California last week I dropped in to one of the stores named on the US a2 site as stocking its milk, and sure enough it was there, all four categories. I wasn't able to find out how well it's selling, but it was clear from the displays that "healthy" milk products such as organic and almond and soy milk are in strong demand.
Yes That's true, all I'm saying is that there may be a limited market given that a2 milk drinkers are likely to be less persuaded to buy ice cream as a group than non a2 drinkers. That's not to say that a2 milk drinkers wont buy a2 ice cream. Could be wrong, could taste delicious and it goes the same way as that milk chocolate that there was a high demand for. In other words it could sell on its taste rather than health benefits.
Would be more inclined to go for a2 unsweetened yoghurt or a2 cheese. Think these would fit better within their market IMO.
Down another 3c . If it carries on then we will not have to buy the SSP:). Might wait till the dust settles and top up at 50c to 55c next year :D.
It looks like its been stagged by the institutions. I'm not a buyer in the high 60's or 70's. It will be interesting to see if it holds 62c in the next 6 months. Around 62c, I'm a confident buyer... at these levels its a buy and close your eyes and pray investment.
I'm bit sceptical if it would go that lower, purely based on strong demand coming in from Aussies. The trading update they've provided recently does not give any reason why it should go down to that level in 6 months time, if anything it should be double that in my opinion.
What year do you predict profits will be $80m+ to warrant $1.40? That's a heck of a lot of cans of formula with a lot of things that could go wrong between now and then. I think at the moment there is technical momentum but can that last 6 months, I'm not sure.
Things heating up in the UK ...finally?
http://www.just-food.com/news/a2-mil..._id131216.aspx
Does ATM have any plans to enter the German market. I know NZers are more familiar (and comfortable?) with the British market. However I think the Germans are more health conscience and arguably more prepared to pay a premium for healthy alternatives. My opinion is probably based on anecdotes! Was it during the British Mad Cows epidemic that continental European meat consumption decreased much more than British? Perhaps the Brits had been keen to get bargain prices.
Wotherspoon said on Friday (25 September) A2 Milk's UK business remains loss-making but was now profitable "at a gross margin level", with sales growing faster.
Does that mean they have been selling at below cost up to know - horrible thought
Mac always kept reminding us that A2m had the highest gross margins of all the players - obviously not in the UK
I'm not an accountant but my understanding is that gross margin simply tells you whether the amount generated by selling a product is greater than the amount it has cost you to create that product, without counting costs such as office expenses, rent, management salaries etc. So I would assume this means the amount received from retailers by a2MC (UK) is greater than what it pays out for procuring the milk from farmers and processing, packaging and transporting it to the retailers. I'm not sure whether or not advertising and promotion costs are counted as production costs or not. But obviously the main cost is in buying, processing, packaging and delivering the product to market, so if that is profitable already I think that's a pretty good sign.
Wotherspoon is also talking about being 'in the black in the UK' in 2016 , and I take that as v encouraging. The current uncertainty re 'investment' (i.e. loss) in 'new' markets such as UK and USA has been well priced in the SP by the market.
I take it as very encouraging now that UK is headed to profit, as is Australia (and I suspect China.) Time will tell.
Almost right
So I would assume this means the amount received from retailers by a2MC (UK) is greater than what it pays out for procuring the milk from farmers and processing, packaging and transporting it to the retailers.
a2m seem to include freight/transport in other expenses - not included in Gross Margin
My point was I would have thought that even in the early stages of production one would want to at least sell the stuff for more than it costs - like buy something for a buck one and sell it for at least a buck so the gross margins can go to sales / advertising / admin and all the other costs
Who am I to question - suppose they know what they doing
As a matter of interest a2m Gross Margin in total is about 33% of sales - a 50% markup on cost
What's up with the big pre-open trades this morning, 42mln shares traded.
Im think Milford just sold out there stake in a2. Last SSH they had 42,792,872. The interesting thing is who bought. About a 6% stake of the company. If you alsso consider the placement someone could have just acquired about 14%
From the Australian....could only copy this little extract as its paid content.
Freedom sells down a2 Milk stake
The Perich family and its listed food group Freedom Foods have sold down a combined stake in listed milk company a2 Milk to 10.4 per cent, from 19 per cent, as Freedom conducts a capital raising this morning. Freedom sold 42.5 million a2 Milk