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 head into The a2 Milk Company's (ATM) 1H25 result not expecting any surprises relative to consensus expectations or company guidance.</li><li>This is a brave ascertation to make given ATM's track record on result days, but the (still) pending supply chain acquisition/JV is the main area of possible surprise.</li><li>Key focus areas are: (1) supply chain updates, (2) China Label (CL) revenue, and (3) the English Label (EL) outlook in light of the new Genesis HMO product release.</li></ul>

We head into The a2 Milk Company's (ATM) 1H25 result not expecting any surprises relative to consensus expectations or company guidance.This is a brave ascertation to make given ATM's track record on result days, but the (still) pending supply chain acquisition/JV is the main area of possible surprise.Key focus areas are: (1) supply chain updates, (2) China Label (CL) revenue, and (3) the English Label (EL) outlook in light of the new Genesis HMO product release.

The A2 Milk Company -1H25 Preview—Supply Chain News?

<ul><li>Kantar data for The a2 Milk Company's (ATM) 1H25 period is highlighting low-single-digit growth, with Q2 showing a solid sequential improvement in market share (primarily China Label [CL] driven).</li><li>This growth is slightly below 1H25 consensus infant formula revenue expectations.</li><li>However, given data volatility, ATM’s track record of exceeding Kantar's CL growth, and recent revenue gains in other areas (primarily MVM and Nutritionals), we don't anticipate material surprises in ATM's 1H25 result. </li></ul>

Kantar data for The a2 Milk Company's (ATM) 1H25 period is highlighting low-single-digit growth, with Q2 showing a solid sequential improvement in market share (primarily China Label [CL] driven).This growth is slightly below 1H25 consensus infant formula revenue expectations.However, given data volatility, ATM’s track record of exceeding Kantar's CL growth, and recent revenue gains in other areas (primarily MVM and Nutritionals), we don't anticipate material surprises in ATM's 1H25 result. 

The A2 Milk Company - Kantar Data—Looking for Improvement

<ul><li>The a2 Milk Company's (ATM) ASM trading update was modestly positive but hasn't altered our view on future earnings.</li><li>The key positive surprise was the initiation of a dividend policy (60% to 80% of normalised NPAT).</li><li>While we expected ATM to announce some form of capital management over the next 12 months, we expected this to occur around the time of a supply chain acquisition. </li></ul>

The a2 Milk Company's (ATM) ASM trading update was modestly positive but hasn't altered our view on future earnings.The key positive surprise was the initiation of a dividend policy (60% to 80% of normalised NPAT).While we expected ATM to announce some form of capital management over the next 12 months, we expected this to occur around the time of a supply chain acquisition. 

<ul><li>There are a number of potential acquisition opportunities that The a2 Milk Company (ATM) could entertain, in reference to its capital allocation framework and prior commentary.</li><li>On 27 September 2024, the company went into trading halt for it to provide itself additional time to inform the market of a potential acquisition.</li><li>In the past it has mentioned NZ processing, blending and canning, and China (both outright and JVs/alliances). </li></ul>

There are a number of potential acquisition opportunities that The a2 Milk Company (ATM) could entertain, in reference to its capital allocation framework and prior commentary.On 27 September 2024, the company went into trading halt for it to provide itself additional time to inform the market of a potential acquisition.In the past it has mentioned NZ processing, blending and canning, and China (both outright and JVs/alliances). 

The A2 Milk Company -Take With One Hand and Give With the Other?

<ul><li>Kantar data on the China Infant Formula (IF) market, for the four week period ended 9 August 2024, shows a mixed start to FY25 for The a2 Milk Company (ATM).</li><li>Value in the four week period was ATM's lowest in absolute terms since February 2024, albeit up +33% year-on-year given the weak prior period.</li><li>Market share of 7.3% is below the strong prior two months of ~8.5% and ATM's 12-month rolling average of 7.6%. </li></ul>

Kantar data on the China Infant Formula (IF) market, for the four week period ended 9 August 2024, shows a mixed start to FY25 for The a2 Milk Company (ATM).Value in the four week period was ATM's lowest in absolute terms since February 2024, albeit up +33% year-on-year given the weak prior period.Market share of 7.3% is below the strong prior two months of ~8.5% and ATM's 12-month rolling average of 7.6%. 

The A2 Milk Company - Kantar Data — Mixed Start to FY25 External Inbox Updates

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 -1H25 Preview—Supply Chain News?

We head into The a2 Milk Company's (ATM) 1H25 result not expecting any surprises relative to consensus expectations or company guidance.

Forsyth Barr

The A2 Milk Company - Kantar Data—Looking for Improvement

Kantar data for The a2 Milk Company's (ATM) 1H25 period is highlighting low-single-digit growth, with Q2 showing a solid sequential improvement in...

Forsyth Barr

The A2 Milk Company - Milking It

The positive share price reaction has unwound ATM's material derate over the past month (on no news), and it trades on a fair ~24x PE.

Forsyth Barr

The A2 Milk Company -Take With One Hand and Give With the Other?

There are a number of potential acquisition opportunities that The a2 Milk Company (ATM) could entertain, in reference to its capital allocation...

Forsyth Barr

The A2 Milk Company - Kantar Data — Mixed Start to FY25 External Inbox Updates

Kantar data on the China Infant Formula (IF) market, for the four week period ended 9 August 2024, shows a mixed start to FY25 for The a2 Milk...

Forsyth Barr

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