Why were you so sure that would happen?
Printable View
A huge gain like that is usually an over reaction and that brings out the profit takers and subsequent drop. The share is obviously worth more than what has been trading at in recent weeks but that value is yet to be determined.
What a roller coaster! I put a sell in at $3.00 when at $2.60 (11am). Had a feeling that when Ozzie opened it would (could) jump again. What about the "poor" souls who got in at $2.50+.... Guess I'll just have to wait until their next forecast upgrade in 2 months time.
Last year the share price was 50c (if you believe that figure was fair value). Revenue for HY2015 was $74.8m. Now (HY2016) $139.2m. But infant formula now a much greater proportion of revenue: Now 53%, up from 22% in HY2015. So lets say profitability on product has doubled overall. That means 'equivalent revenue' of 2 x $139.2m = $278.4m. That makes a multiplication factor of :
$278.4/ $74.8 = 3.7
3.7 x 50c = $1.85
So it looks like the share price increase has outstripped the underlying company performance.
China at last turning an EBITDA profit (not the same as a NPAT profit).Quote:
- Chinese IF (infant formula) market update and how much further potential still lie in there
EBITDA Margin: 1.2/8.4 = 14.2%
Compare with the same figure for Australia and New Zealand
34.5 /127.9 = 26.9%
So heaps of the most profitable line going to China. But even with next to no infrastructure costs borne by ATM, the Chinese market is still only half as profitable as the home market. It might be worry if ATM started selling ordinary milk in China then. They could start racking up some big losses on that.
Big increase in the losses in the UK and USA markets. It's all in the market development plan they say. Fair enough, but it still looks like a long hard grind in the UK and USA from here. Looks like USA in particular is in trouble.Quote:
- US expansion plans and how they are tracking
- UK market performance and any plans to launch IF into that region
ATM still looks very much like a one trick pony still to me. The ANZ market is looking good, although how much that is being propped up by indirect baby formula sales to China is unknown. Actual direct sales to China looking good, but not looking like that market will overtake ANZ (or should that be ANZ/China as one).
Actual NPAT of $10.1m was a positive surprise. That should stay the need for any more capital raisings.
Overall though, it looks like at north of $2, the share price has got way ahead of the underlying business. I re-iterate my warning to shareholders. Fundamentally ATM is severely overvalued, and still has the potential to halve in price overnight.
SNOOPY
Almost 15% of all shares traded yesterday on both markets (87m in Aus, 15m in NZ). Big big volume day!
Added some useful perspective yesterday mid-morning and may have got a few sellers thinking...what with AIR about to announce ~ $500m before tax next week...kind of puts $10m after tax into perspective doesn't it. Didn't one of the major brokers value this a little while back at ~ $1.10 ?
Declared after tax profit is not the measuring stiick for ATM. Management policy seems to have been to spend all profits on market development, and in doing so let NPAT reduce to zero. Hence in my summary of results, I noted an actual profit as positive surprise. The half year after tax profit profit could have been nearly double $10m if ATM pulled out ofthe USA and UK. But if they did that,there goes the growth premium....
That $1.10 broker valuation IIRC was assuming the growth markets of the UK, USA and China all performed to perfection too.
ATM as a company is a great example of how to develop a consumer business. The capital raising at above the prevailing market price last year was a master stroke. The problem I have with ATM is not with the product, roll out strategy or management. It is with the public, mainly aussie speculators if the evolution in the share register is to be believed, driving the share price up to a level that is so completely divorced with the reality of the business, that it has got crazy.
Some here have criticised Freedom Foods for selling out too cheaply. But these guys would have a pretty good idea of what the company was worth. They chose, on balance, to sell and reinvest elsewhere. Just because the share price more or less doubled after that doesn't make Freedom Foods fools. Markets do not always behave rationally with small cap (in ASX terms) shares like this.
SNOOPY
I find it somewhat interesting that a company with the growth prospects of ATM..
Who just released a 1Q report like the one this week is sliding backwards in share price..
I am not surprised at all. Its a traders stock right now and if you are a holder, you have had multiple chances to cash in on the frenzy. A double top is now in place so big resistance around $2.50 and potential for this rocket to come all the way back down to earth if it fails to hold onto $1.70.