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>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

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/a2-milk-co-ltd" target="_blank" data-smartkarma-citation="entities:17656:1" rel="noopener">A2 Milk Co Ltd (ATM NZ)</a> will replace <a href="https://www.smartkarma.com/entities/ryman-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:10590:1" rel="noopener">Ryman Healthcare (RYM NZ)</a> in the S&amp;P/NZX 10 Index at the close of trading on 21 March.</li>
<li>Passive trackers will need to buy 0.8x ADV in <a href="https://www.smartkarma.com/entities/a2-milk-co-ltd" target="_blank" data-smartkarma-citation="entities:17656:1" rel="noopener">A2 Milk Co Ltd (ATM NZ)</a> and will need to sell 1.2x ADV in <a href="https://www.smartkarma.com/entities/ryman-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:10590:1" rel="noopener">Ryman Healthcare (RYM NZ)</a>. </li>
<li>Importantly, <a href="https://www.smartkarma.com/entities/a2-milk-co-ltd" target="_blank" data-smartkarma-citation="entities:17656:1" rel="noopener">A2 Milk Co Ltd (ATM NZ)</a> is a deletion from a global index at the close on 21 March and the selling from those passive trackers is far larger.</li>
</ul>



A2 Milk Co Ltd (ATM NZ) will replace Ryman Healthcare (RYM NZ) in the S&amp;P/NZX 10 Index at the close of trading on 21 March.
Passive trackers will need to buy 0.8x ADV in A2 Milk Co Ltd (ATM NZ) and will need to sell 1.2x ADV in Ryman Healthcare (RYM NZ). 
Importantly, A2 Milk Co Ltd (ATM NZ) is a deletion from a global index at the close on 21 March and the selling from those passive trackers is far larger.


S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)

<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

<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>There could be one constituent change each for the NZX10 Index and the NZX50 Index/ NZX50 Portfolio Index in March.</li>
<li>The flows are limited but the impacts are huge, and the stocks could move ahead of the announcement of the changes.</li>
<li>
<a href="https://www.smartkarma.com/entities/a2-milk-co-ltd" target="_blank" data-smartkarma-citation="entities:17656:1" rel="noopener">A2 Milk Co Ltd (ATM NZ)</a> is a potential inclusion to the NZX10 Index, but the inflows will be completely overshadowed by the potential deletion from a global index.</li>
</ul>


There could be one constituent change each for the NZX10 Index and the NZX50 Index/ NZX50 Portfolio Index in March.
The flows are limited but the impacts are huge, and the stocks could move ahead of the announcement of the changes.

A2 Milk Co Ltd (ATM NZ) is a potential inclusion to the NZX10 Index, but the inflows will be completely overshadowed by the potential deletion from a global index.


S&P/NZX Index Rebalance Preview: Couple of Changes in March

New Zealand

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 (ATM NZ)

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

S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)

a2Milk replaces Ryman Healthcare in the NZX10 Index. Ryman has continued to slide following the NZ$1bn equity raise while a2 Milk is a deletion...

Brian Freitas

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

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

S&P/NZX Index Rebalance Preview: Couple of Changes in March

There could be one change each for the NZX10 and NZX50 indices in March. Flows in the stocks are limited but impact is huge. A2Milk could have huge...

Brian Freitas

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