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>Most indicators are pointing to a robust FY24 result when The a2 Milk Company (ATM) reports on Monday, 19 August.</li><li>Our mosaic of data points shows: (1) strong market share gains (supported by ongoing consolidation), particularly in the offline channel, and (2) solid brand health metrics.</li><li>FY25 consensus revenue expectations don't appear stretched in light of ATM's 2H24 exit run-rate (and improving CY24 birth rates), but an EBITDA margin of ~15.2% is at the top-end of our expectations (absent any material US or Mataura Valley Milk [MVM] changes). </li></ul>

Most indicators are pointing to a robust FY24 result when The a2 Milk Company (ATM) reports on Monday, 19 August.Our mosaic of data points shows: (1) strong market share gains (supported by ongoing consolidation), particularly in the offline channel, and (2) solid brand health metrics.FY25 consensus revenue expectations don't appear stretched in light of ATM's 2H24 exit run-rate (and improving CY24 birth rates), but an EBITDA margin of ~15.2% is at the top-end of our expectations (absent any material US or Mataura Valley Milk [MVM] changes). 

The A2 Milk Company - FY24 Preview — Well Formulated External Inbox

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We believe a 1-4-month pullback/consolidation is ongoing, and we would look for an important low to be made near the U.S. election.</li>
<li>Supports to watch continue to be $110 on $ACWI and $41-42 on MSCI EM $EEM, and whether these levels hold or not will determine the severity of the pullback.</li>
<li>Primary reasons for this bearish expectation include major bullish RS inflections for defensive Sectors, and bearish price action in the U.S. (SPX), Japan (TOPIX/Nikkei 225), and Europe (EURO STOXX 50)</li>
</ul>


We believe a 1-4-month pullback/consolidation is ongoing, and we would look for an important low to be made near the U.S. election.
Supports to watch continue to be $110 on $ACWI and $41-42 on MSCI EM $EEM, and whether these levels hold or not will determine the severity of the pullback.
Primary reasons for this bearish expectation include major bullish RS inflections for defensive Sectors, and bearish price action in the U.S. (SPX), Japan (TOPIX/Nikkei 225), and Europe (EURO STOXX 50)


Pullback Continues $ACWI; Stick With Defensives; More Countries With Improving Price and RS Trends

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Fonterra Shareholders Fund / Equity Bottom-Up

<ul>
<li>Fonterra Shareholders Fund's dividend yield was 14.2% in 2023. Its dividend yield averaged 8.7% in the past three years. </li>
<li>Fonterra Co-Operative Group, is a New Zealand based multinational dairy cooperative. Outside investors who are not allowed to hold shares in Fonterra Co-Operative Group can invest in Fonterra Shareholders Fund. </li>
<li>In May 2024, Fonterra announced that it plans to sell off its consumer products businesses and concentrate on business to business sales as a dairy ingredients supplier.</li>
</ul>


Fonterra Shareholders Fund's dividend yield was 14.2% in 2023. Its dividend yield averaged 8.7% in the past three years. 
Fonterra Co-Operative Group, is a New Zealand based multinational dairy cooperative. Outside investors who are not allowed to hold shares in Fonterra Co-Operative Group can invest in Fonterra Shareholders Fund. 
In May 2024, Fonterra announced that it plans to sell off its consumer products businesses and concentrate on business to business sales as a dairy ingredients supplier.


Asian Dividend Gems: Fonterra Shareholders Fund

<ul><li>Kantar data provides an indicator of brand strength for The a2 Milk Company (ATM) and its key competitors in the infant formula (IF) segment, capturing purchasing habits for a sample of consumers across Urban China.</li><li>February data (four week period ended 23 February 2024) was weak for the industry, and ATM's market share cycled off recent highs, but rolling trends remain constructive.</li><li>FY24 year-to-date data is tracking modestly ahead of consensus expectations and company guidance, but we caution: (1) comparable periods get harder over the next two months, (2) its start to 2H24 is modestly behind its strong end to 1H24, and (3) the inherent volatility in the data. </li></ul>

Kantar data provides an indicator of brand strength for The a2 Milk Company (ATM) and its key competitors in the infant formula (IF) segment, capturing purchasing habits for a sample of consumers across Urban China.February data (four week period ended 23 February 2024) was weak for the industry, and ATM's market share cycled off recent highs, but rolling trends remain constructive.FY24 year-to-date data is tracking modestly ahead of consensus expectations and company guidance, but we caution: (1) comparable periods get harder over the next two months, (2) its start to 2H24 is modestly behind its strong end to 1H24, and (3) the inherent volatility in the data. 

<ul><li>It was difficult to fault The a2 Milk Company's (ATM) 1H24 result. (1) Infant Formula (IF) revenue was ahead of our expectations, (2) solid cost control was evident, (3) cash flow was robust with ATM's net cash growing to ~NZ$790m, and (4) strong growth was delivered in ‘other nutritionals’.</li><li>In-market execution is impressive, the earnings outlook continues to be de-risked, and ATM has a strong cash position of ~NZ$800m.</li><li>That said, we view current valuation as fair and downgrade our rating to NEUTRAL.</li></ul>

It was difficult to fault The a2 Milk Company's (ATM) 1H24 result. (1) Infant Formula (IF) revenue was ahead of our expectations, (2) solid cost control was evident, (3) cash flow was robust with ATM's net cash growing to ~NZ$790m, and (4) strong growth was delivered in ‘other nutritionals’.In-market execution is impressive, the earnings outlook continues to be de-risked, and ATM has a strong cash position of ~NZ$800m.That said, we view current valuation as fair and downgrade our rating to NEUTRAL.

The A2 Milk Company - Time for a Breather Downgrade to NEUTRAL

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 - FY24 Preview — Well Formulated External Inbox

Our mosaic of data points shows: (1) strong market share gains (supported by ongoing consolidation), particularly in the offline channel, and (2)...

Forsyth Barr

Pullback Continues $ACWI; Stick With Defensives; More Countries With Improving Price and RS Trends

Pullback Continues $ACWI; Stick With Defensives. We continue to believe a 1- to 4-month pullback/consolidation is ongoing, and would look for an...

Vermilion Research

Asian Dividend Gems: Fonterra Shareholders Fund

Fonterra Shareholders Fund provides high dividend yield. Fonterra is the number one dairy producer in New Zealand. Its plans to divest Consumer...

Douglas Kim

The A2 Milk Company - Kantar Data Check

Kantar data provides an indicator of brand strength for The a2 Milk Company (ATM) and its key competitors in the infant formula (IF) segment

Forsyth Barr

The A2 Milk Company - Time for a Breather Downgrade to NEUTRAL

In-market execution is impressive, the earnings outlook continues to be de-risked, and ATM has a strong cash position of ~NZ$800m.

Forsyth Barr

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