New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>We downgrade our rating on The a2 Milk Company (ATM) to UNDERPERFORM from NEUTRAL.</li><li>We estimate the current share price implies long-term China Infant Formula (IF) market share of ~13% versus our FY26 estimate of ~7%, with our longer-term forecasts more conservative at ~10%.</li><li>ATM has performed well over recent times and we are constructive on the a2 Pokeno opportunity.</li></ul>

We downgrade our rating on The a2 Milk Company (ATM) to UNDERPERFORM from NEUTRAL.We estimate the current share price implies long-term China Infant Formula (IF) market share of ~13% versus our FY26 estimate of ~7%, with our longer-term forecasts more conservative at ~10%.ATM has performed well over recent times and we are constructive on the a2 Pokeno opportunity.

The A2 Milk Company - The Milk Has Frothed Over

<ul><li>A solid 2H25 result from The a2 Milk Company (ATM) was the side event to the ‘a2 Pokeno’ acquisition.</li><li>ATM will acquire 100% of Yashili NZ for NZ$282m and has divested Mataura Valley Milk (MVM) for NZ$100m.</li><li>We view this as strategically and financially sound.</li></ul>

A solid 2H25 result from The a2 Milk Company (ATM) was the side event to the ‘a2 Pokeno’ acquisition.ATM will acquire 100% of Yashili NZ for NZ$282m and has divested Mataura Valley Milk (MVM) for NZ$100m.We view this as strategically and financially sound.

The A2 Milk Company FY25 Result—Milking The Margin

<ul><li>The a2 Milk Company’s (ATM) share price tends to be highly volatile on result days—positively and negatively—but we are hopeful this time is different.</li><li>Top-line momentum appears robust, which should support solid growth into FY26 (assuming SML’s issues aren’t too big of a drag).</li><li>Beyond core China infant formula (IF) growth, updates on: (1) Genesis HMO traction; (2) supply chain transformation; (3) other nutritionals performance; and (4) US/MVM, are of particular interest.</li></ul>

The a2 Milk Company’s (ATM) share price tends to be highly volatile on result days—positively and negatively—but we are hopeful this time is different.Top-line momentum appears robust, which should support solid growth into FY26 (assuming SML’s issues aren’t too big of a drag).Beyond core China infant formula (IF) growth, updates on: (1) Genesis HMO traction; (2) supply chain transformation; (3) other nutritionals performance; and (4) US/MVM, are of particular interest.

The A2 Milk Company FY25 Preview—A Smoother Ride?

<ul><li>Mixed is how we would describe our feelings heading into The a2 Milk Company's (ATM) FY25 result.</li><li>Looking to FY26, with (1) a strong 2H exit run-rate, and (2) larger impact of a2 Genesis HMO, our earnings are slightly ahead of consensus.</li><li>We think valuation is slightly elevated at current levels, but countering that we are comfortable with consensus' outlook and are balancing the possible near-term catalysts of (1) supply chain acquisition (which could be announced at any moment), and (2) capital management opportunities.</li></ul>

Mixed is how we would describe our feelings heading into The a2 Milk Company's (ATM) FY25 result.Looking to FY26, with (1) a strong 2H exit run-rate, and (2) larger impact of a2 Genesis HMO, our earnings are slightly ahead of consensus.We think valuation is slightly elevated at current levels, but countering that we are comfortable with consensus' outlook and are balancing the possible near-term catalysts of (1) supply chain acquisition (which could be announced at any moment), and (2) capital management opportunities.

The A2 Milk Company Wheying Up The Investment Case

<ul><li>There was little to fault in The a2 Milk Company's (ATM) 1H25 result.</li><li>English Label (EL) revenue—particularly CBEC—stole the show, driven by strong execution in lower-tier cities and early-stage products, along with an improving market backdrop.</li><li>Increased earnings guidance implies a 2H25 EBITDA margin of 15.0%–15.5%, marking the first genuine margin expansion since pre-COVID and likely strengthening confidence in the margin outlook. </li></ul>

There was little to fault in The a2 Milk Company's (ATM) 1H25 result.English Label (EL) revenue—particularly CBEC—stole the show, driven by strong execution in lower-tier cities and early-stage products, along with an improving market backdrop.Increased earnings guidance implies a 2H25 EBITDA margin of 15.0%–15.5%, marking the first genuine margin expansion since pre-COVID and likely strengthening confidence in the margin outlook. 

The A2 Milk Company - 1H25 Result—More than Baby Steps

Australia

a2 Milk Company Limited produces cow milk which is free of a protein called beta casein A1.  The Company 
offers its products in Australia and New Zealand.

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A2 Milk Co Ltd (A2M AU)

The A2 Milk Company - The Milk Has Frothed Over

We estimate the current share price implies long-term China Infant Formula (IF) market share of ~13% versus our FY26 estimate of ~7%, with our...

Forsyth Barr

The A2 Milk Company FY25 Result—Milking The Margin

ATM will acquire 100% of Yashili NZ for NZ$282m and has divested Mataura Valley Milk (MVM) for NZ$100m. We view this as strategically and...

Forsyth Barr

The A2 Milk Company FY25 Preview—A Smoother Ride?

The a2 Milk Company’s (ATM) share price tends to be highly volatile on result days—positively and negatively—but we are hopeful this time is...

Forsyth Barr

The A2 Milk Company Wheying Up The Investment Case

Mixed is how we would describe our feelings heading into The a2 Milk Company's (ATM) FY25 result. Looking to FY26, with (1) a strong 2H exit run...

Forsyth Barr

The A2 Milk Company - 1H25 Result—More than Baby Steps

English Label (EL) revenue—particularly CBEC—stole the show, driven by strong execution in lower-tier cities and early-stage products, along with...

Forsyth Barr

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