A2M 2.04% $9.60 the a2 milk company limited

Crestone / UBS take

  1. 180 Posts.
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    A2 Milk – Earnings downgrade
    • A2M is trading -20% in NZ on what appears to be 4% revenue miss and a 7-10% EBITDA miss
    • FY18 revenue guidance is for NZ$900-$920mn vs consensus at $947mn
    • Gross Margin in-line with 1H18 (~50%).
    • Citing the new packaging plant investment and higher marketing in the US and China for full year spend of NZ$82-87m vs $42m last year
    • The positive is that this is spend that does not earn a return this FY…and the new CEO gets a re-based earnings set to begin life.
    • Valuation the pushback but I would not be factoring in significant FY19 downgrades and view this as a buying opportunity for a very high ROIC/ROE business, with the stock trading on a PEG of ~0.7x
    • As we’ve seen with Lend Lease and Boral, expensive companies carry excessive price risk relative to any earnings impact.
    • Buyer of weakness
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Mkt cap $7.201B
Open High Low Value Volume
$9.64 $9.84 $9.37 $58.34M 6.065M

Buyers (Bids)

No. Vol. Price($)
3 3285 $9.60

Sellers (Offers)

Price($) Vol. No.
$9.62 25935 1
Last update - 16.10pm 18/10/2018 (20 minute delay) ?
-0.20 ( 1.61 %)
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$9.61 $9.84   $9.38 917978
Last updated 15.59pm 18/10/2018 (live) ?
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