Nice read...and pretty much what's been outlined at time of FY results, however FY18 outlook on slide 32 is the key...
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Bought a small packet of these for the long term hold a couple of weeks ago. I think intolerances toward Lactose, Gluten and other things is hugely on the rise (although many, many, many, people self diagnose these things). This will definitely help A2 sell sell sell.
Nice rises in ATM SP recently. Possibly spurred by The Australian reporting that ATM is in a consortium looking at buying assets of the struggling Aus milk producer, Murray Goulburn.
I'm not too enthused by this speculation as I like the flexibility of the ATM business model to work with contractors rather than owning plant. Maybe ATM's partner SML will see this as an opportunity? Interesting times.
Agree lf, I don't like our management going after that failed Murray Goulburn assets/plants...smells bad.
Nice to see some confirmation from posters on Hot Copper that it was just a rumour.
And we're inching close to another magic milestone of $6, onwards and upwards...
Holy cow..what happened there, strong open on ASX and ATM is past $6 mark, KACHING!!! BOOM :t_up:
hmm yet again wondering if I should invest and dithering and watching the sp rise. I am glad I finally made the leap 3 weeks back with a very small shareholding. Reading the investor presentation I am reminded about the possible special dividend and buy back. If the shareprice is at what they consider it should be though, does that mean there wouldnt be a buy back. Is that good or bad? I wonder what sort of special dividend they are thinking about..
Welcome aboard the ATM ride Suse. I hope your holding is in profit, if so perhaps a good time to keep nibbling when/if the share market gets election jitters.
Re yr Q's - I suspect all will be revealed when ATM do their next market update (LY this was late Nov and Dec)
One thing you'll find about ATM is that the management are sound and there are few reasons not to trust them (unlike NTL's surprise cash raise, for example.) Perhaps if the SP rises to a level where ATM don't see any point in purchasing, then more is available to be distributed to SH via special dividend!! Time will tell.
Great to see ATM above $6.00 today and already well on the way to the FY18 predictions we made a month or so ago ie
BP Brokers - $A5.85 (now looking v conservative!!)
Hardt - $NZ 6.90
Me - $NZ 7.50
sb9 - $NZ 8.25 to $10
So why would the company do a buy back at an all time high, ? Does that make sense? Is that designed to keep the price up for any reason ,like management options coming on line or something ? Just asking ...... Isnt it done when the price is low?
Thanks LF for those thoughts and lets hope you and sb9 are totally on the money! :)
And yes, thank goodness for being in profit with ATM as it is taking the sting out of NTL losses at the moment. I definitely got caught up in the hype! - makes me feel like a fool and their money are easily parted, but I'm prepared to hang in there for now and hope for the best.
Harry Markowitz has a lot to answer for..eh :(..
To be fair to Harry the key word in the Portfolio Theory is "allocate"..which suggests at commencement (or accumulate/sell during.. thus altering the portfolio metrics)...It's all the do with the level of risk you as an investor is happy to put up with and then mathematically find the maximised capital gain to that level of risk you assigned yourself to (usually the higher the level risk requires a higher level of return (maximised = most efficient way).. It says nothing about derisking during a huge capital gain event unless there's a sudden risk increase..It would make no sense would it as it would be contrary the Theory's principle of maximising capital gain..also derisking (selling) your lowest risk asset (best performer of making a capital gain) is contrary to the principle as it could dramatically lessen the portfolio maximising power of making a capital gain and also push the risk to the outside of your assigned risk perimeter resulting in a much less efficient portfolio..
I amazes me the investors (including myself sometimes) realising their profits (profit-taking) on their best performing stock and keep their dogs (badly performing stock) in the hope that some day they may get their money back. That is the exact opposite to the Principle..(Very inefficient portfolio = high outside assigned risk perimeter with minimising capital gain)
It is a complicated mathematical method that has to be recalculated very often as they are all variables... but there are simplistic methods for us plebs..There's a rule of thumb "buy/accumulate in up trending stock" ..and... "sell/don't buy downtrending stock" (high risk to capital gain).
Holding onto a downtrending stock can alter the risk/maximum capital gain metrics within one's Portfolio to the point that the resulting higher percentage risk becomes outside your established risk perimeter thereby creating a sell of the offending culprit to lower the risk back into the established perimeter thereby raising back up the efficiency of the portfolio (risk/maximised capital gain)..
Conclusion:..you should not have sold...
Hi Clints, I'm more of a long term trader, than a 'day trader' so I don't watch the hourly changes in SP. However; I note that morning trading in the NZX can change SP's in the afternoon with dual listed stocks, as the ASX opens at noon our time. The late aft trends you note might be to ASX short sellers or day traders having to exit quickly to avoid losses on a SP that is moving up against their expectations. If your late afternoon dip theory is right, then perhaps this is a good time to time your NZX purchases. My general rule in buying shares is simply to try and sneak a price lower than the VWAP of the day....then sit back and let the long term trend do its magic. Good luck out there!
Tricky decision to 'hang on' and hope. One of my proven tested rules is to "Take your losses quickly; make your gains long." Retaining a loss just ties up your money while other up trending stocks romp away. I too got caught in the hype of NTL, (a bit off topic on this tread) but, sure they have the gold, however given the political uncertainty, the difficulty of mining 'under water', and misleading statements by management I felt it best to get out quick.
I just wish I had bought more when they were sub 60c less than three years ago :mellow:.
Last buy was $2.39 in late Feb -even that is a 2.5 bagger - this is so awesome :).
Best Wishes
Paper Tiger
Amazingly this stock was just $2 at Christmas. ATM...the gift that keeps on giving ! Wish I had more but my mother taught me a long time ago to be grateful for small mercies.
Yep wish I had more of these as well and less of SUM others. What a rocket ship! :D
I've held large holdings of this stock on and off until about a month ago and always felt nervous holding it in comparison to other large holdings. Have left mountain loads on the table over that time, however I see it as a high risk stock with multiple risks not common to other companies I have had, and continue to have large holdings in. I'm happy just to let it go now, don't know if I'll buy it again or not, I don't sweat the small stuff so much these days and quickly let regrets and wishes go, and move on.
I sold all my ATM a year ago and just bought back in a few weeks ago. I have watched them rise and told myself I should buy but never did. With hindsight I identified that the reason I didn’t buy earlier was the belief that if it sounds too good to be true then it probably is. But I am a believer now. I remember watching XRO go up to over $40 and watching in disbelief.
You do not trade the markets. You can only trade your beliefs about the markets.—Van K. Tharp
http://www.vantharp.com/tharp-concepts/psychology.asp
There are many that watched XRO go to $45 dollars in disbelief and now they don't believe it will ever get back to that price again, who knows if it will or not? ATM is a great company but one that makes me the most nervous holding in what I consider a meaningful holding ,so that's a red flag for me.
I’m just reading Colin Nicholson’s book The Aggressive Investor. He says we are afraid to let a profit run, because of fear that it will evaporate. In investing, the saying that “you cannot go broke taking a profit” is WRONG. Our whole endeavour is to balance out all the small losses and the small gains, eliminate the large losses and let the large profits accumulate. If we take all our profits when they are small, the BEST result we can expect will be mediocre. It comes back to the psychology of investing – fear, greed, avoiding regret and ego.
Successful investors have a simple strategy: they try to buy into a trend once it has clearly started and sell out of it once it has clearly failed. As he says it is easy to say but devilishly difficult for most adults to do.
Hoop let me know when you think the trend is failing.
Bit of a sting in it's tail? Maybe under $6 today?
Any news? What's with the drops lately
Profit taking and apparently rebalancing by institutions
Synlalit FY results for year ending 31 Jul 2017 released tomorrow.
Key things to look for me around increase in current production capacity and of more important is update on recently acquired plant in Auckland.
And with bit of luck, hopefully the CFDA approval comes through tomorrow as well.
SML's results out now.
Impressive results. As yet no CFDA approval. Plenty of good news for ATM including no mention of any issues with the new Auckland and Dunsandel plants, and exciting hints at new products to come;
"Synlait (NZX: SML; ASX: SM1) has reported their strongest performance yet with a net profit after tax of $38.2 million, double digit growth in profit margins and revenue increasing 39% to $759 million......
.....Underpinning the expansion of Synlait’s infant formula business is the acquisition of a second site in Auckland to double blending and consumer packaging capacity and a substantial investment to double the capacity of their wetmix kitchens in Dunsandel.
“Alongside our preparation for another phase of rapid growth, we’ve achieved a solid increase in profit and balance sheet strength in FY17. We intend to increase margins and operational efficiency, as well as canned infant formula volumes in FY18 to 30,000 MT – 35,000 MT, as a result of our preparation in FY17.”
“We expect to announce further plans in due course. These plans will allow us to keep up with medium to long term infant formula demand, as well as signal new high-returning product categories we intend to move into in the coming years.”
ATM well placed with its shareholding in SML looking v good.
Here are key takeaways for me from Synlait's report:
* Demand for higher margin products continued to rise, with finished infant formula volumes growing 17% to 18,776 MT and margins before tax increasing by $10 million.
* Underpinning the expansion of Synlait’s infant formula business is the acquisition of a second site in Auckland to double blending and consumer packaging capacity and a substantial investment to double the capacity of their wetmix kitchens in Dunsandel.
* “Investing in Synlait Auckland and our wetmix facility at Synlait Dunsandel will relieve any capacity constraints for the second half of FY18.” said Mr Penno.
* Alongside our preparation for another phase of rapid growth, we’ve achieved a solid increase in profit and balance sheet strength in FY17. We intend to increase margins and operational efficiency, as well as canned infant formula volumes in FY18 to 30,000 MT – 35,000 MT, as a result of our preparation in FY17.”
That should do wonders, nuff said.
You left out the key questions. Synlait produces infant formula for other customers , not just A2. The real questions are:
1/ How much of Synlait's increased infant formula production capacity is contractually available to A2 Milk Ltd?
2/ How much increased raw A2 milk supply will be available to process? If the raw product is not available, it doesn't matter what the increased capacity of the processor is.
SNOOPY
Hey Snoopy, what's your valuation of these shares currently ? I remember when they were around $2.50, you said there was no little upside for holders, now they are around $6, that's a massive gain.
I recently asked these both questions to one of Synlait Senior Managers (as part of a factory tour).
Answer to 1: I may well ask, but he is not allowed to answer (funny ideas with commercial sensitivity);
Answer to 2: Lots of A2 herds (and milk) available to them - they currently put a lot of A2 milk into the standard supply .... but no - he didn't specify "a lot" (I asked for percentages ...).
Unfortunately the breakdown of product mix isn't readily available from published records.
However, I would say its at least >80% for A2 Milk if not more.
You only have to look across ditch about stories and articles relating to A2 IF shortage right across all super market chains and chemist warehouse. With that in perspective one can only imagine the extra capacity mostly going to satiate A2 IF demand.
That's my take anyway...
Sorry forgot another bit of information to add...the strategic partnership agreement of 5 years between Synlait and A2 milk recently and A2's investment in Synlait shares goes a long way in explaining how close they work together...
A few months ago I suggested SML could get to $10 within 5 years. I think my estimate may be a bit conservative now. Lots of opportunities for Synlait and with low debt and growth agenda, they can continue to grow and become NZs version of a true value add dairy manufacturer.
Im happy with 11% growth for a consolidation year. Wonder when they may think about divvies, 3-5 years maybe???
Would be interested on what assumptions you base your >80% for A2. It certainly is not based on volume or revenue ;)
Most of their product (per volume) leaves their factory in 25kg paper bags. None of them is labelled "A2"
The last time I visited (admittedly in winter) couldn't I see any truck delivering A2 milk ... despite 4 or 5 trucks being unloaded.
As well - if you look into the SML report - they say (page 75) "Revenues of approximately 48% (2016: 58%) are derived from the top three external customers". Obviously - A2 will be one of these external customers, but if they all three achieve only 48%, Than A2 milk can't have 80%.
I agree however that A2 will have a significant impact on their margin: A2 formula is (one of) their high margin products and the canning line looked pretty busy both times I visited (with A2 cans being filled). However, I very much doubt that A2 contributes >80% to their margin - in that case you would wonder why they bother with the majority of their other products making less than 20%? What would Fonterra live of (they don't have A2)?
I got it wrong didn't I? My scepticism was because of my doubts about being able to repeat the success of China/Australia (I think you have to regard that as one market for baby formula, given that such a high proportion of Australian A2 baby formula sales end up in China) in the USA and the UK. I still hold those doubts. But guess what? Maybe it doesn't matter?
China is such a huge market that perhaps the 'exponential growth' implied by the A2 share price growth can be achieved in China alone? A2's marketing seems second to none. I really doubt that all the buyers of A2 are getting the benefit they think they are getting. But some obviously are. And if the others think they are, there is no reason that A2 won't continue to do well.
The problem with valuing something like ATM is that I like to think what benchmark I can compare it to? I don't think I know the China market well enough or the grocery market well enough to make an educated guess about choosing a benchmark. My valuation is: I don't know! All I know is the current share price incorporates a lot of hope and hype and I can't judge how much of that is justified. ATM is off my investment radar for that reason. I don't chase share price charts.
SNOOPY
Sourced from Hot copper...
https://www.fnarena.com/index.php/20...ed-for-growth/
Key highlight being...in relation to Synlait results and contribution of A2 to their sales and margin.
"Any new investment will be conditional on further growth in demand in advance of current projections but for the Bell Potter this highlights the optimism management has in the business. Furthermore, the broker envisages internalisation of the packaging of the a2 Milk adult nutrition product will be a potential profit driver in the second half. The broker estimates a2 Milk accounted for in excess of 80% of the company's consumer-packaged volumes and in excess of 30% of gross profit in FY17."
Bull markets are born on pessimism, grow on scepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.
John Templeton
I'll say that ATM is in the mature stage, and won't buy as the window of opportunity had long gone. It will appreciate as all market darlings do, but not forever.
On a roll again. Grateful for small mercies that I have some. Glad I took a brave pill a few weeks back and topped up with some more at ~ $4.60...wish I had taken a double dose of that brave pill and topped up with twice as many lol
Hi sb9, thanks for clarifying that. This is what I thought. I assume you realise that "80% of the company's consumer-packaged volumes" are different to 80% of their output? Most of their output (in volume) is milk powder going into large 25kg bags (i.e. not consumer packaged) - they have a huge warehouse full of them. Happy however to believe that the A2 cans ensemble around 80% of their 1kg can's (the consumer packaged volumes).
Big close on ASX at day's high of 5.73 equates to NZ 6.27...massive break out :)
Because of my leaning toward large holdings I follow the Buffett rule and only buy shares that I would be happy to hold if the market shut down for 10 years, this stock doesn't fit that bill for me at it's current SP. PS-Boring, essential infrastructure stocks will continue to pay you in the form of divvies during those 10 years.
Interesting..... ATM not essential. I would have thought food/drink is a most basic essential. Perhaps you should talk to young mothers who use infant formula and others who suffer from Irritible Bowl Syndrome. ATM has a well proven 'unique proposition'.
I agree for those coming in now ATM may be looking a bit 'toppy', however for this long term holder/believer a 10 bagger is a welcome part of my portfolio. I agree with Yoda and will keep in my portfolio until it breaks below my TA MA indicators.
Lastly to understand ATM it helps to understand the Asian market and the impact of Daigou traders. Consider this quote from Hot Copper's poster Prophet's Insight.
"Saw some news on the Financial Review a few months ago that the biggest Daigou in Australia belongs to a low profile Vietnamese (most likely from a Chinese descendant) ... Nguyen in Regents park southwestern Sydney. Its net profit is around 300 mil a year and has become the biggest air freight customer for Qantas within a few years time. $300 mil is a astronomical figure for a daigou business it's greater than the net profit of A2m, Bal(which is making nothing for the previous year) and blackmores all combined. And more impressively is that he's only just one of the Daigous."
Left field, for most of the population water is the only essential drink, and for babies there is breast milk and other alternatives to ATM, so in that light it is not essential.
Hi mate. Its nice to see you back on the forum posting regularly. I think to some extent that's fair comment but there is a large emerging middle class in China that want the very very best for their babies and are prepared to pay a premium price for that. Perhaps they see the best for their only child or if they are allowed / want to have two as really being essential ?
That said I think you make an excellent point about the dependability and reliability of utility companies through bad times and good.
Couldn't agree more lf, the word "essential" is very subjective and relative.
Some great insights on HC forum re Daigou traders from the mentioned poster and also robust discussion about Fonterra's position in overall dairy industry with insights from their ASM y'day.
Some more interesting speculation (and I stress 'speculation') about the news re Fontera bidding to takeover the Aust Milk producer, Murray Goulburn.
Here's what Hot Copper's poster, Working on Boats speculates today;
"My summary is that this is a great strategic move on account of both Fonterra and A2 should if it all come together for both parties. Coupled with the commentary of Fonterra possibly supplying a level of product (milk) to A2, Fonterra may have finally realised A2 milk protein could be the product of the future. So they're positioning themselves to gradually breed up the herds, and dispose of an "insignificant" amount of product to eagerly open armed A2 in the short/medium term. That's got to be a great help to A2's current & possible future supply problems. WIth A2's global patents already in place, competition may be a word we don't hear much about for a few years yet. In the meantime Synlait looking to open up the R&D facitilty here in NZ which one could assume is closely aligned with future growth/needs of A2. Fonterra has operated a R&D facility in NZ for years.
Fonterra s goal has always been to supply and sell as much milk based product as possible, obviously with huge variations in product, ie cheese butter yogurts etc. So if they manage to pull this off it's a win win. FOnterra supplies, A2 names/processes.
OMG the stars are more aligned than ever! I'm actually changing my sentiment today back to a "buy""
It wasn't long ago that Fonterra was rubbishing the A2 product.
Hit the '+1000%' marker today! Understand that bad news might hit the price hard but this is one rollercoaster I'm happy to stay on. Is already the ride of my life............. :t_up: :t_up: :t_up:
I have to keep going out so I don't hit the sell button.
Hold onto your hats fellas, looks like the CFDA rego has come through...as per HC poster who checks the list regularly, better to wait for official confirmation from A2/Synlait tomorrow or in next few days.
Now official...... yee ha!!
28 September 2017
NZX / ASX MARKET RELEASE
SYNLAIT RECEIVES CFDA REGISTRATION OF THE a2 MILK COMPANY’S INFANT FORMULA
Synlait (NZX: SML; ASX: SM1) has received registration which will allow exports of The a2 Milk Company Limited’s (NZX: ATM; ASX: A2M) China label infant formula to China to continue.
All manufacturers of infant formula are required to register brands and recipes with the China Food and Drug Administration (CFDA) in order to import products into China, through traditional import channels, from 1 January 2018.
http://www.sharechat.co.nz/article/0...nt-formulahtml
Yipeee !!!!! Bring on $10 a share...only a matter of when, not if.
P.S. Disc Topped up a few more on the open this morning at $6.77, (no brave pill required)
Well I'm going away from my normal Long Black and will make an extra frothy cappuccino with A2 Milk to celebrate.
I need a seat belt................:eek2: :eek2: :eek2:
Do you guys keep saying to yourselves "why didn't I buy more".I keep saying it to myself every time I check my portfolio especially when I look at the dogs i've bought like MPG!
Yes, even last week I still contemplated getting more but didn't. Is $7 still a good buy?
Yeap, not happy with the mileage I am getting out of MPG, (you see what I did there :) ) time to cut and run and load up on this I reckon.
Unbeliiiieeeeeeevvvvvaaaaaabbbbbblllllllleeeee! :t_up:
I totally agree, having been a SML shareholder for a few years (and not ATM), its awesome to see both companies doing so well. SML now by far my biggest holding and breaking my loose rules on portfolio size.
I'm expecting a slight pullback in price today once the Aussie market opens, its case of buy on rumour and sell on fact as few funds would be locking in some profits at this level.
Is this still worth buying at the current price?
Suggest you DYOR - there is a lot of information contained on past posts to this forum, plus ATM management have a strong history of delivering, so read ATM's past financial reports, updates and forecasts carefully.
In addition, several posters on this forum have forecast the levels where they believe the SP will be by end of FY18...... However, whether all that is enough to entice you, is up to you..... and then there is the question of a possible dividend yield.
Actually i'm not decided on whether or not I will buy in.
The market value of ATM is $4.9 b, and that of Air New Zealand is $3.7 b. And Skycity is valued at $2.5 b. Now if I have the money, I'll buy Skycity.