A2M

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$6.88 the a2 milk company limited

SM1 Result, page-21

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Womtrade

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19/09/18

08:50

Post #: 35687408
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Originally posted by arms ↑

If you take a quick look at just a figure and don't drill into the report you may think that, but if you dig deeper and look at the last line in this paragraph:
The a2 Platinum® brand of infant formula has enjoyed another strong year of growth in both Australia / New Zealand (ANZ) and China, which has driven our growth in canned infant formula volumes (IFC). Late in FY18 we extended our supply agreement with a2MC, providing for a five year minimum term to 31 July 2023, as their exclusive manufacturer of IFC for the ANZ and China markets (to agreed volumes). We also increased the dedicated manufacturing capacity available to a2MC for future growth.

and
Finished goods inventory increased $55.1 million (82%) to $122.6 million driven by finished goods inventory quantities having increased by 78% since FY17. The majority of the increase in finished goods inventory is bulk infant formula that has been manufactured to meet forecast consumer packaged infant formula sales in the first quarter of FY19.

and
Raw material inventory increased by $7.6 million (50%) to $15.2 million. These raw materials are primarily made up of lactose and other ingredients for infant formula production as well as packaging and associated consumable items. The increase is the result of forecast growth in consumer packaged infant formula sales in FY19.

and
Volumes to other IFC customers have been modest, particularly in the second half of the year as we work to secure product registrations for the key markets of China and the U.S. These have been slower than expected.

All indicates that A2M is going great and that Synlait have been getting ready for a bumper year ahead for A2m.

Havent read in depth yet but all looks good for SM1, good result considering they were flagging a weaker second half to the year.

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Great call @arms

Initially looking at the 19FY forecast it was interesting to only see the forecast of 41000-45000MT of IFC sales but when looking deeper into it and seeing the large inventory build up as well as the significant increased numbers in lactoferrin it all makes sense now on where its heading.

Imho seems that the forecast is conservative as they probably only have the requirements on finished volume to be available during H1-19FY.

GLTAH and DYOR

A2M Price at posting: $11.12 Sentiment: Buy Disclosure: Held
4 Upvote

0 Great analysis

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Last $6.88		Change 0.000(0.00%)		Mkt cap ! $4.973B

Open	High	Low	Value	Volume
$6.90	$6.90	$6.80	$7.266M	1.060M

Buyers (Bids)

No.	Vol.	Price($)
2	12501	$6.87

Sellers (Offers)

Price($)	Vol.	No.
$6.88	33092	3

View Market Depth

No.	Vol.	Price($)
1	292	6.840
2	8043	6.820
1	500	6.810
1	1100	6.800
2	9844	6.750

Price($)	Vol.	No.
6.880	23244	1
6.900	7848	10
6.910	1515	1
6.920	20500	2
6.950	17350	9

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