a2 Milk Stock Analysis + Intrinsic Value Update (NZX & ASX)

[@InvestingwithTom]

Thanks for the fundraising support so far! Donate to Movember Below: movember.com/m/14270701?mc=1

[@convertedaussiejedi2135]

Annual recurring revenue increased by 55% to A$1.225 million YoY.. A 160% growth (YoY) was seen in Platform SaaS customers.. Total 4.238 million people are enrolled with OLL. There was a quarterly increase of 563k, up +15% QoQ. kalkinemedia.com/au/stocks/technology/weekly-roundup-tech-stocks-that-emerged-as-winners-4ds-oll-esh Definitely a growing market! There are companies that have suffered big blows from COVID; there are companies that have benefited from COVID; and there are companies for whom COVID has only accelerated trends in their markets that were already happening. “Edtech” company OpenLearning Limited (OLL) is firmly in the latter category. www.sharecafe.com.au/2020/11/02/transition-pathway-to-unsw-a-transformative-deal-for-openlearning/ Chart's and more for $OLL🚀 www.tradingview.com/symbols/ASX-OLL/ OpenLearning $OLL Reported nothing but growth in the economic and pandemic crisis, I believe with so many people being out of work and needing to be retained through upskilling with Micro-Credentials and partnerships that have already been made. OpenLearning should keep growing at a good pace. Especially with the recent partnership that UNSW Global and OpenLearning made. Knowing how large and good this University of UNSW really is! Top 50 in the world and their Law is ranked #12 in the world, Alows me to have a good understanding where this companies future will be. My opinion ofcourse, please always do your own research and make your own educated opinion. Education Minister Dan Tehan wants micro-credentials to be a permanent fixture for Australian education system. www.thesentiment.com.au/pandemic-poses-opportunity-to-online-learning-platform-openlearning/ $OLL STOCKHEAD GROWTH stockhead.com.au/company/openlearning/ OpenLearning. solutions.openlearning.com/press/ UNSW, Is In The 50 most Best Collage/University In The world and OpenLearning is partnered with this institution, that is of the highest esteemed universitie in the world and many others as well. This is just the latest partnership. techinvest.online/open-learning-agreement-with-unsw-to-deliver-pathway-program/ Very big changes to how the world functions has filtered into the higher education sector with the University of NSW partnering with OpenLearning (ASX: $OLL) to create a new online pathway program that can transition successful students into UNSW degrees www.thesentiment.com.au/interview-online-openlearning-and-unsw-partner-for-international-pathway-program/

[@hughjackson218]

Margin of Safety on this stock has arrived bromigo's

[@jeetsinghbudhail]

Great video Tom, i have started to make small position and will be looking to average down if price drop further.

[@InvestingwithTom]

Thanks for sharing!

[@amandaholt1539]

Any update on A2 Tom??

[@georgeeason8909]

How are you feeling now about this stock? Are the fundamentals still there?

[@CompoundingEverything]

Nice video man, I was more than happy to grab an entry into this one around 30% MOS earlier this week, hoping to increase the holding over the coming months under $10 would be glorious, not sure it will come to fruition though. Keep up the solid content bro, really enjoying it.

[@InvestingwithTom]

Thanks mate. Good to see you’re still alive! Haha

[@GuyKenniffPuls]

Great analysis. I'm sure you'd be looking at this closely now!

[@frostmelody]

love to see an update with the announcement on the downgrade and trading halt today. It's now under $10 on ASX.

[@InvestingwithTom]

Will have to look through the latest press release!

[@hughjackson218]

@@yahia3656 They are just different stock exchanges. ASX = Australia. NZX = New Zealand. There may be differences in tax etc depending on your nationality and you exchange you buy into. But often you can buy the same stock on different exchanges.

[@hughjackson218]

@@yahia3656 I believe that's because of currency differences and the fact that the two businesses update the PE at different rates.

[@scottscriticalmass]

Thanks for the A2 overview... I've long been a fan of A2 Milk, but have yet to invest in the company. That might change soon tho'. Well done and super thorough as always Tom... Please know the work you put into these videos is appreciated. Cheers to you!

[@Noveshento]

Thanks Tom. Ill share a bit of context on the infant formula (IF) industry. During the last decade big international players (think of Nestle, Danone, Reckitt Benckiser, Abbot) have enjoyed massive growth in China. Major tailwinds were the increase of disposable income, abolishing one-child policy, but specially capitalizing on the fear and mistrust of chinese families for their own 'made in china' products after the melamine scandal that killed dozens of babies produced by a local IF manufacturer. A2 company has emerged in the past 5 years with their flagship product A2 claiming it brings added benefits for child development. Whether these claims are warranted is still debatable as you know. But fact is that A2 company has benefited from smart marketing and first mover advantage so far and took 3rd place in IF market share in china. RISKS: all the major international players mentioned above have already or will soon introduce their own A2 formulas (it takes 2-3yrs in IF industry to introduce a new formulation). This is/will inevitably take a bite on A2's share. Moreover, and more concerning, the secular trend of mistrust in dairy products by chinese families is shifting positively towards local producers. As years pass by, the new generation forgets about the scandal. Besides, chinese regulators are more strict with local manufacturers and force them to adopt EU standards. With all this being said, i dont think A2 company or any other IF multinational will be able to grow at 25% in china going forward (just look at Q3 of nestle, RB and Danone - major decline after HK cross-border shutdown). IMO this is not a short-term event, the trend is truly shifting and internarional players have been investing in lots of installed capacity - thus one can expect excess supply.

[@InvestingwithTom]

Thanks heaps for sharing. Those are great insights! Looks like I’ve got more work to do on the competition front

[@Caiogasp]

Good stuff Tom. Agree totally with your valuation and my 50% MOS also lands around $10. Fingers crossed! Man... you could be also looking at TWE (Treasury Wine States) and provide a similar analyses. I’ve been watching them for a while and MOS is much closer than A2M. They have many things in common, like relying on China and US for growth. Cheers man.

[@InvestingwithTom]

Have been meaning to look at that one!

[@davidong1577]

Great solid video. This is coming from a chartered accountant 😄

[@InvestingwithTom]

I'll take that :) Thanks for watching

[@AndrewBrownInvesting]

appreciate the depth of research there, thanks mate. I still find it strange seeing the Chinese ladies in Chemist Warehouse in Australia fighting over the baby formula, i don't understand there business model at all haha. They had to limit people to only 2 tubs per person in Brisbane... Obviously good news about the reputation of NZ and AUS baby formula in China. Runway is really long, I think the margin of safety doesn't need to be 50% in this case. maybe 30% margin of safety is plenty. Do you personally keep a strict 50% margin of safety or do you have exceptions? Also, do you know of any superstar investors involved in A2?

[@InvestingwithTom]

That’s a good sign I guess 😂 You’ve got to understand that the “great business” part is already factored into the numbers so margin of safety is just as important as ever. You could get away with a smaller one if your confidence in the growth rates is super high, but things can always come out of left field (like the current situation) and you need to protect yourself IMO

[@AndrewBrownInvesting]

@@InvestingwithTom don't get me wrong, I agree margin of safety is critical. But, a 30% or 50% margin of safety can be argued. Are you strict on your margin of safety or a bit loose like me..

[@InvestingwithTom]

@@AndrewBrownInvesting depends on the number of opportunities and my confidence in the numbers to be honest. If I can’t find much and I’m confident in my conservative growth assumptions I might lax, but I do my best not to make a habit of that

[@AndrewBrownInvesting]

@@InvestingwithTom Yeah sweet. That's sounds pretty much exactly the same as how my brain works too. So i sometimes become more loose with my margin of safety when a superstar investor invests in the same company. Micron for example, my numbers say about $33 is a good buy price, but Pabrai averaged in at about $38 so I would be more loose in this situation "IF" I was to invest in Micron. Does that sound about right? I'm just trying to get a feel for how other people are thinking about buy prices. always learning

[@InvestingwithTom]

@@AndrewBrownInvesting I don’t know if the super investor makes a huge difference to be honest, it’s really just comparing it to my other options. If I don’t have many I’ll be more lenient

[@SB-yq6ze]

Great review Tom. What are your thoughts on A2s growth prospects with a number of multinationals (nestle and Abbott to name a few) moving into this space.

[@InvestingwithTom]

Definitely an area to watch. Too hard to make a call right now

[@erickoop5442]

Do you know the story why Chinese spend so much money on milk powder Tom?

[@erickoop5442]

en.wikipedia.org/wiki/2008_Chinese_milk_scandal#Trade_and_industry_impact

[@samvoulalis205]

BUY. NOW

[@camkay8855]

Not my cup of tea personally but looks like a potentially good investment. Great video

[@InvestingwithTom]

Thanks mate and fair enough!

[@JoshuaWang]

Good analysis - getting really close to my buy price too. Shame they don't pay a dividend tho 😂 Thoughts on them paying a dividend in FY2022?

[@InvestingwithTom]

Dividends are like crack to you people 😂

[@Machine_NZ]

Hi Tom, whats your thoughts on the up coming Harmoney Corp Limited IPO ?. May be worth a video...

[@aidanptasznik447]

Hey Tom, thanks for sharing your insight, very helpful. Since you mentioned having a degree in Agricultural Science, would you wanna take a look at Inghams Group (asx: ing)? They are one of the largest poultry producers in Australia and recently rose about 15% late last week after announcing they are anticipating an increase in sales figures, as well as bigger dividend payments. Would be interested to hear your thoughts as they are possibly a decent value play, albeit with some risks (high debt, hazy future growth), particularly around the ~3$ mark, which is where they were sitting a week ago. (Tassals is also pretty intriguing). Cheers

[@borkarroshan]

Hey Tom, such a pleasure watching your videos. Great analysis and you cover all aspects, which makes decision making very easy. Was wondering if you plan to have a similar detailed analysis video for Plexure stock. Would be very much helpful to get insights based on your point of view. Thanks in advance :)

[@Grassmeasuring]

Hi Tom. Thank you for your video. Where is the new research on A2 happening? Very interested in finding up to date information. Kind regards from Ireland.

[@sajan0212]

Thanks for sharing the knowledge. Liked the way you covered so many aspects of the business. Is there an entry barrier for this kind of business? Guess , No.

[@seanbanayan7273]

Great video Tom. More videos like this would be greatly appreciated.

[@RetroRanger]

So how do you feel about such a strong company like Nestle and Co is making a2 milk and trying to also get into that market?

[@travelcurb9444]

Hey Tom, are you at all concerned with the high amount of reference to EBITDA in A2M's annual reports? Buffett and (especially) Munger always view a managers constant referral to EBITDA as concerning, as I'm sure you already know.

[@InvestingwithTom]

Yes and no. Unfortunately it’s common place now, but the management team to reference free cash flow too and that’s what all of my valuation work is based on. They’re not using it to cover up otherwise poor cash flows which is the main risk with that stuff

[@juinshii]

Appreciate the update! Thanks!

[@demetrioparada7538]

It is a very good analysis and much better than many "professional" analysts. Well done!

[@InvestingwithTom]

Appreciate it. Thanks 🙏

[@Clakerelul]

Great and complete analysis Tom! How many companies do u usually have on your radar ? I find it hard to follow news and updates on more than 3-4. On top of this, there are also the companies that we already own, which makes it even harder.

[@InvestingwithTom]

I feel your pain on that one! I have around 10 that I get weekly new updates for from google

[@4realdavid]

Hey Tom how much do you bench?

[@Neil.Denize]

Great video mate, thanks heaps I have been looking forward to this one. I was really interested to see your thoughts on it, I'm waiting patiently on the sidelines as well.

[@InvestingwithTom]

Thanks man!

[@KelechIwuaba]

Great breakdown. Actually helps me learn how to determine a growth rate for other companies which is the hardest part to determine

[@InvestingwithTom]

It’s all a bit of an educated guess! Glad it was useful 🙂

[@garethwagstaff2851]

I got 11.50 for my 50% mos 😅 Im an optimistic bugger

[@InvestingwithTom]

Those growth rates have a big impact! And don’t forget to factor the downgrade in guidance

[@MehdiSina]

what a coincident we both cover a2m (A2 Milk company) in our recent videos - amazing analysis Tom

[@InvestingwithTom]

Great minds 😉

[@jametti3141]

Great update.Thanks. Long term holder.

[@InvestingwithTom]

Nice 👍

[@fenbury]

Nice Video man, been thinking about A2 for a while now

[@InvestingwithTom]

🙏

[@mervinmachado4216]

Nice one Tom. Would be keen to know your thoughts on air nz

[@InvestingwithTom]

Haven’t really looked too closely tbh! Too hard basket haha

[@AaronHamkins]

Outstanding content!

[@CodeWithCal]

Thanks

[@InvestingwithTom]

👍

[@equaus5276]

Definitely something to look into! Also would you have any idea on transferring shares from country to country? I plan on moving to Australia there doesn't really seem to be a clear answer. I did see that the ASX does have a2 milk company on it though so that wouldn't really be a problem but for others.

[@InvestingwithTom]

Well you can own NZX and ASX share regardless of where you live (as far as I know). It would be doing a transfer from broker to broker that you might have to do. I’ve done that before, just requires a bit of paperwork

[@equaus5276]

@@InvestingwithTom Yeah is does, thank you

[@chiragdarji1571]

good stuff Tom. Cheers!!!

[@jchoi3925]

Great video, thanks for the update much appreciated :)

[@InvestingwithTom]

Glad to hear!

[@peterhansen6353]

Fantastic video!! More of these please

[@InvestingwithTom]

Will see what I can do!

[@VanNguyen-ip3so]

good analysis for A2M Tom.

[@InvestingwithTom]

Thanks 🙂

[@ASXInvestor]

That early point you discussed about 'business going really well and stock not going anywhere' is a great fundamental contrarion indicator. A simple sense check about value stocks that the market might be sleeping on! Great analysis 👏

[@bugalugsnz1]

Synlait is giving me conniptions at the moment. Would value your thoughts.

[@InvestingwithTom]

I need to look at it a bit closer yet to be honest

[@bugalugsnz1]

www.nzx.com/announcements/362735 seems weird that they can’t/won’t name the new multinational partner...

[@bugalugsnz1]

Well, there you go. Trading halt on Synlait. Video suggestion - capital raising?!

[@Chadsta11]

Much appreciated, thank you.

[@InvestingwithTom]

Thanks for watching!

[@adamcracroft3587]

Mos is all well and good but a good business I'd a good business, so it's better to jump on at a fair price rather than wait for a level thst might never eventuate

[@InvestingwithTom]

Fair enough, as long as you understand that it increases your reliance on everything having to go right for a long time!

[@adamcracroft3587]

@@InvestingwithTom got to be some risk at some point. If it goes too low it might be because the company's prospects are damaged long term. I'm confident we won't get below $13 but that's my opinion. If your buy order is at $12.,5 it'd be a big opportunity lost.

[@InvestingwithTom]

@@adamcracroft3587 it’s possible but I think price discipline is important also. If the opportunity set is slim I can see the argument for paying up a little (emphasis on little!)

[@aljones7333]

Mate !!! Awesome content 👏👏

[@InvestingwithTom]

Thanks man!

[@darrenhayes1692]

Nice. Good effort 👍

[@InvestingwithTom]

Thanks mate!

[@joshzhuang2149]

great stuff.

[@InvestingwithTom]

Appreciate it 🙂

[@WISERandHAPPIER]

I came up with 11 dollars as my 50% MOS for A2 milk - maybe I am being over positive about the outlook eeekkk.

[@InvestingwithTom]

Easy to do! And hey, you might be right too. Don’t take my numbers as gospel either

[@jessicabee9299]

Perfect timing was going to look more closley at A2 on the weekend 😊

[@InvestingwithTom]

Glad to hear

[@andyshen9118]

mate u waffle too much in the vedio, get to the point!

[@Destamoon]

Love me some placebo milk

[@InvestingwithTom]

How good

[@giffordjourneyto1million]

ATM has been killing me, just looked at the charts and did a quick analysis on their profits and brought in. Lucky it was just small money in my Sharesies play account. I regret watching the 'Don't watch this part'

[@InvestingwithTom]

You were warned 😂