These results are really good, as they have been obtained...

These results are really good, as they have been obtained despite 2 elements :
- an estimated decrease for the average size of their pearls by around 12 % yoy,
- and an increase of 7 % for their operating costs.

So, this large increase of NPAT, normalised EBITDA and free cash flow comes from just 1 element : pricing.
The company indicated that sales volume was flat, so all the revenue growth (+ 26 % yoy) is due to pricing.
In fact, the real price increase is even higher (more around 38 %), as pricing was also negatively affected by the size reduction of pearls, as well as the yen decrease (price for these pearls are usually measured in JPY).

So, going forward, the stability of ATP earnings will mainly depend on 2 elements :
- future pricing,
- change in average pearls size.

For now, the trend for pricing remains quite strong due both to supply (limited production) and demand (robust Chinese demand).
If the company has no control on market prices, it seems to continue to optimize its distribution (which help them to get the best unit prices).
It remains difficult to forecast average pearl size, but last indications from the company was a bottoming for average size.

Overall, this company remains risky because of the low liquidity of its share and the risks of its farming business.
At the same time, the level of risk has diminished :
- strong results during the last 3 years (PE* of only 3.5 x the average NPAT of the last years),
- great ability to offset their pearl quality problems thanks to a strong pricing effect (it would be interesting to know what part of the pricing can be explained by their own initiatives).


* part of the low PE is explained by the fact that the company is paying a very low level of taxes for now.