First time post, but read you guys on Hot Copper every day. Kiwi long term owner of ATM. As a fundamentals investor, 10 years China experience, survived GFC, specialising in in-depth analysis, built balls of steel through the conventional investor / stockbroker wringer over 20 years, I've gravitated to a small number of early phase market disruptors (e.g. ATM, APT, GMV, TRU) and it's a thrill every day. Love following and learning from Hoots and TA's as well but at heart I'm a fundamentals guy.
To address your point, with all the ATM noise, market manipulation, wild price fluctuations, an order-of-magnitude fundamentals compass is an absolutely essential reality check for LTs to get a sane idea of whether today's SP is in the ball park.
In October 2018 when SP was $6 (pre shocks like Fonterra coming on board and Jane dumping shares) I projected FY19 in NZD, revenue $1.384B, GM719m, EBITDA 456m, (33%), EBIT 454m, (minimal DA), Income tax 138m, NPAT 321 (45cents/share), implying a $13.41 SP@30xPE, $15.64 @35xPE, $17.43 @39xPE.
At the time this was well ahead of analysts but they are now catching up. It may still be a bit aggressive but we will get close. Some numbers will be a bit out (e.g. Marketing 110 v YGO74) but margin should be higher after H1's knock-out, so swings and roundabouts.
So at today's NZD15, is ATM "fairly valued"? On these numbers I'd say yes. In my opinion 30x-35x PE is entirely reasonable for such a growth story. People are forever asking me whether it should be trailling or future, of course with such a category it should be future, even a few years ahead. At ATM's stage, if SP gets into my current FY SP projection at some stage during that year, I'd say the market has caught up as much as you would hope.
If it's "fairy valued" now, as a long term investor should we sell or is it worth hanging in there? This is where the magic of doing our homework, constantly updating our assumptions, tuning our spreadsheets so we can trust it kicks in so we can sleep at night. Haha.
My FY20 projection, factoring in progress on what we know of their initiatives (product, country, channel, regulatory etc etc) , plus usual growth curve stuff ( revenue growth moderating slightly from 50% to 40%, big hoist in marketing spend, scale benefits kicking in at GM level then being spent, timing sensitivity of when supply step-changes occur etc etc) are NPAT 460 (64 cents share). This suggests a $19SP @30XPE, $22SP @35XPE and $25 @39XPE.
This is about a 40% upside on our current SP at some time during the FY20 year if these assumptions are in the ball park. So we can now make a reasonably informed decision to (a) sell now at what is todays "fairly valued' +/-$15 to go on to our next great idea which will do better, or (b) hang in there in expectation that SP will deliver on such fundamental analysis based lines.
Bigger picture: this is not a milk company, its not even IF, it is a nutrition revolution. With the likes of Apple, Netflix etc the law of big numbers gets raised ( thats light years away with ATM).
DYOR, this is not investment advice.
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