A2M - The A2 Milk Company

[galumay]

Thanks - appreciate any advice if you have the time.

Welcome to ASF, now to the hard part! Buying your first shares based on a hot tip from Hubbie's mate at work is about as clever as betting on red at the casino.

No doubt you will get a wide range of views from members here, my view for what its worth is that you probably shouldn't be an active investor in equities. If you have some extra cash pay down any debt and then anything left put extra into your super.

 

[frugal.rock]

@loverat
You may be interested in reading up on related stocks, such as;
SM1 (Sylait Milk)
BUB (Bubs)

Posted this in Bubs thread recently.

So, frustratingly I dumped a while ago when price drifted down again. Took a small loss.

Keen to learn why milk, (or in this case, baby formula) stocks are headed downhill, I did some research and found that 2020 resulted in being the lowest birthing year for a long time in China.
I imagine it may be similar elsewhere and I surmise this will probably continue into 2021 somewhat, given baking periods of 9 months.

Had heard previously that there much lower cases of premature birthrates also, but that is uncorrelated to this. That was a result of lockdowns and healthier living etc

I note other milk stocks such as SM1 and A2M are showing similar downhill heading charts, however I will be keeping a lazy eye on them.

View attachment 120298

As for a broker, I can recommend Selfwealth (as a reputable business) as I use them myself for $9.50 fee per trade of ANY value, and the shares are owned by you, not the broker.

We don't provide advice here on ASF, but for what it's worth, I have considered starting a thread recently based on the milk stocks being at price lows.

Maybe others can post their opinions on where we are at regarding the "sitch" overall on milk stocks.

A2M has been a bit of a market darling recently historically.

Good luck in whatever you decide to do, and remember, none of this is advice.

Cheers.

 

[joeno]

@loverat
You may be interested in reading up on related stocks, such as;
SM1 (Sylait Milk)
BUB (Bubs)

Posted this in Bubs thread recently.


As for a broker, I can recommend Selfwealth (as a reputable business) as I use them myself for $9.50 fee per trade of ANY value, and the shares are owned by you, not the broker.

We don't provide advice here on ASF, but for what it's worth, I have considered starting a thread recently based on the milk stocks being at price lows.

Maybe others can post their opinions on where we are at regarding the "sitch" overall on milk stocks.

A2M has been a bit of a market darling recently historically.

Good luck in whatever you decide to do, and remember, none of this is advice.

Cheers.

Synlait looks more attractive than A2 milk from an investment PoV.

 

[peter2]

Very interesting day today for A2M. Strong demand.

 

[Knobby22]

Very interesting day today for A2M. Strong demand.

Starting to get interested again, been 2 years.

 

[Dona Ferentes]

Starting to get interested again, been 2 years.

or not

 

[Miner]

or not

View attachment 123431

Mate @Dona Ferentes
Could you please elaborate the 'interesting' word ? A2 has been going to uninterrupted south and not long ago, almost every expert treated A2 to be a future.
It is going to the level I started in the past and sold after it reached $4. But that was a different time.
Thanks in advance

 

[Dona Ferentes]

Mate @Dona Ferentes
Could you please elaborate the 'interesting' word ? A2 has been going to uninterrupted south and not long ago, almost every expert treated A2 to be a future.
It is going to the level I started in the past and sold after it reached $4. But that was a different time.
Thanks in advance

wasn't me, your Honour. It was @Knobby what said "interesting".

 

[peter2]

In my defence your honour, the word "interesting" is a purposely noncommittal adjective when applied to a trade opportunity. Just as "beauty is in the eye of the beholder", "one man's trash is another's treasure".

The "three gaps down" observation posted by @Dona Ferentes many weeks ago is a strong canine indicator. Woof, A2M is a dog.

I drew the support line at 7.70 and when price bounced off it, I thought it "interesting". I needed to see a higher low for a setup but price kept going down and down. Now that it's below the support line, I'll let this sleeping dog lie.

 

[Miner]

In my defence your honour, the word "interesting" is a purposely noncommittal adjective when applied to a trade opportunity. Just as "beauty is in the eye of the beholder", "one man's trash is another's treasure".

The "three gaps down" observation posted by @Dona Ferentes many weeks ago is a strong canine indicator. Woof, A2M is a dog.

I drew the support line at 7.70 and when price bounced off it, I thought it "interesting". I needed to see a higher low for a setup but price kept going down and down. Now that it's below the support line, I'll let this sleeping dog lie.

View attachment 123435

Thanks Pete @peter2 for quoting Wordsworth ?.
All good and rich context - letting sleeping dog die without letting RSPCA knows about it.
On a serious note, thanks a lot for delivering the message on A2 as a hot potato.

 

[bsnews]

Thanks Pete @peter2 for quoting Wordsworth ?.
All good and rich context - letting sleeping dog die without letting RSPCA knows about it.
On a serious note, thanks a lot for delivering the message on A2 as a hot potato.

I would want a positive financial update from the company before I would look at this business.

 

[Dona Ferentes]

I would want a positive financial update from the company before I would look at this business.

on the strength of today's Ann, this wasn't it!! Sold down to under $6 for a while

The trading dynamics in the China infant nutrition market have been and continue to be challenging for a2MC and many international competitors
• While a2MC’s 3Q21 trading was broadly in line with plan, it is clear that the actions taken to address challenges in the daigou/reseller and CBEC channels will not result in sufficient improvement on 3Q21 in pricing, sales and inventory levels to meet our previous guidance based on April sales being well below plan
• The Board tasked management to undertake a comprehensive review of inventory in the trade and this work has indicated that the level of channel inventory is higher than had been anticipated
• As a result of the inventory review, it is clear that the challenges in the daigou/reseller and CBEC channels have been exacerbated by excess inventory and difficulties with visibility
• In the interest of the long-term health of the a2 brand and the medium-term trading outlook of the business, more aggressive actions to address excess inventory will be taken which will impact FY21 revenue and EBITDA, and potentially 1Q22


• FY21 revenue
The Company is now targeting revenue for FY21 in the order of $1.20 billion to $1.25 billion.
The significant decline from the outlook provided in February reflects the impact of the lower than expected sales in 4Q21 versus prior plan and the further actions being taken to rebalance the channels by actively reducing sales in May/June.
It will take some time to rebalance inventory levels and restore channel health. An immediate recovery is not expected and a further update for FY22 will be provided at the Company’s results in August.

FY21 EBITDA
The Company is expecting an earnings before interest, depreciation and amortisation (EBITDA) to sales margin for FY21 in the order of 11% to 12% (excluding MVM transaction costs).
The significantly lower EBITDA margin outlook from that provided in February reflects:
- The lower than expected sales in 4Q21 versus prior plan and the further actions being taken to rebalance the channels by actively reducing sales in May/June
- A stock provision of approximately $80 million to $90 million which is in addition to the $23 million stock provision recognised in 1H21. This includes costs to dispose of excess inventory in a controlled and sustainable manner
- One-off costs of approximately $8 million associated with the implementation of the Company’s new cloud-based enterprise resource planning system

 

[galumay]

Miner, I think Bell Potter are ridiculously bullish for a cyclical agricultural commodity business like A2M, despite its stonk status, one day value and price will coincide and a lot of capital will go up in smoke IMO. Hopefully I am wrong for the sake of current speculators.

My thoughts nearly 2 years ago, I was probably wrong to describe them as a cyclical agricultural commodity business, more like a cyclical agricultural commodity reseller, whose entire value proposition was based on being able to create a brand for same. For sure they have suffered as a result from Covid, but an overly promotional management combined with a low margin undifferentiated domestic food product didn't look to me like the stonk that speculators saw.

Hopefully those that had done well, saw the warning signs and booked some of their profits before it the relentless decline.

 

[peter2]

Make that four gaps down now. Gap downs are like cockroaches, when you see one, there are others around.

 

[Miner]

A2M- once a darling for market now gasping for support

 

[peter2]

Definition of an optimist. Thinking that this daily reversal pattern (123 Low) is the start of a trend reversal in A2M.

 

[debtfree]

Definition of an optimist. Thinking that this daily reversal pattern (123 Low) is the start of a trend reversal in A2M.

What makes you think it will be different this time? Is it the increasing volume? Do you think this is an indication of institutional buying now, starting to accumulate?

 

[peter2]

Sorry, I should have included a "tongue in cheek" emoji.
A few days where the price hasn't gone down is insignificant to the prior price fall of 11 months. It's going to take a LOT more than a few days to stop this freight train and then reverse it.

 

[over9k]

Anyone got a tl:dr on this thing? Is it going to zero?

 

[galumay]

This mornings announcement wont help then, peter2 !