Smartkarma AI Primers, Smartkarma

αSK Primers

Smartkarma AI Primers

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Equity Bottom-Up

Fonterra Co-Operative Group / Equity Bottom-Up

<ul>
 <li>Fonterra is pivoting its strategy to focus on high-value ingredients and foodservice channels, divesting from its consumer brands to streamline operations and improve returns on capital.</li>
 <li>The co-operative structure, owned by approximately 9,000 New Zealand farmers, provides a significant competitive advantage through a stable and high-quality milk supply, forming the backbone of its global operations.</li>
 <li>While facing risks from commodity price volatility and increased geopolitical tensions, particularly in its key China market, the company is demonstrating strong financial discipline, evidenced by robust earnings growth and a significantly increased dividend payout.</li>
</ul>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.


  Fonterra is pivoting its strategy to focus on high-value ingredients and foodservice channels, divesting from its consumer brands to streamline operations and improve returns on capital.
  The co-operative structure, owned by approximately 9,000 New Zealand farmers, provides a significant competitive advantage through a stable and high-quality milk supply, forming the backbone of its global operations.
  While facing risks from commodity price volatility and increased geopolitical tensions, particularly in its key China market, the company is demonstrating strong financial discipline, evidenced by robust earnings growth and a significantly increased dividend payout.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Primer: Fonterra Co-Operative Group (FCG NZ) - Aug 2026

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.

<ul><li>NZX will report its FY25 result on Thursday 26 February.</li><li>We expect a result in the upper half of its guidance range (NZ$49m—NZ$54m), slightly ahead of NZX’s expectations from its 1H25 result (midpoint of its range), due to strong market returns in Funds Management.</li><li>Our key focus areas at the result will be: (1) Funds Management cost growth; we expect solid margin improvement in FY25 but expect cost growth to have increased through the year; (2) Markets EBITDA; we expect it down -8% year-on-year in 2H25, versus down -5% in 1H25; (3) any additional Wealth Tech client wins beyond its already announced Craigs deal; and (4) FY26 guidance; we estimate operating EBITDA of NZ$57.5m, broadly in-line with consensus, and dividend growth for the first time since FY17.</li></ul>

NZX will report its FY25 result on Thursday 26 February.We expect a result in the upper half of its guidance range (NZ$49m—NZ$54m), slightly ahead of NZX’s expectations from its 1H25 result (midpoint of its range), due to strong market returns in Funds Management.Our key focus areas at the result will be: (1) Funds Management cost growth; we expect solid margin improvement in FY25 but expect cost growth to have increased through the year; (2) Markets EBITDA; we expect it down -8% year-on-year in 2H25, versus down -5% in 1H25; (3) any additional Wealth Tech client wins beyond its already announced Craigs deal; and (4) FY26 guidance; we estimate operating EBITDA of NZ$57.5m, broadly in-line with consensus, and dividend growth for the first time since FY17.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Predicting binary events based on regulatory action or inaction is not ideal. Decide Monday or Tuesday to either sell <a href="https://www.smartkarma.com/entities/shibaura-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:12704:1" rel="noopener">Shibaura Electronics (6957 JP)</a> in the market or tender.</li>
<li>
<a href="https://www.smartkarma.com/entities/krungthai-card-pcl" target="_blank" data-smartkarma-citation="entities:20097:1" rel="noopener">Krungthai Card (KTC TB)</a> is still a buy as latest pledged shares numbers fall to 2.3% of shares outstanding, down from 16.3% in May.</li>
<li>
<a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> appears "cheap" to 90%-held <a href="https://www.smartkarma.com/entities/yihai-kerry-arawana-holdings-c" target="_blank" data-smartkarma-citation="entities:33230:1" rel="noopener">Yihai Kerry Arawana Holdings C (300999 CH)</a>; however recent implied stub figures have rolled over</li>
</ul>


Predicting binary events based on regulatory action or inaction is not ideal. Decide Monday or Tuesday to either sell Shibaura Electronics (6957 JP) in the market or tender.

Krungthai Card (KTC TB) is still a buy as latest pledged shares numbers fall to 2.3% of shares outstanding, down from 16.3% in May.

Wilmar International (WIL SP) appears "cheap" to 90%-held Yihai Kerry Arawana Holdings C (300999 CH); however recent implied stub figures have rolled over


Last Week In Event SPACE: Shibaura Electronics, Krungthai Card, Wilmar, First Pac, Fonterra

Fonterra Co-Operative Group / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fonterra-co-operative-group-ltd" target="_blank" data-smartkarma-citation="entities:28146:1" rel="noopener">Fonterra Co-Operative Group (FCG NZ)</a> has agreed to sell its consumer and associated businesses to Lactalis for NZ$3.845bn, in line with prior market valuations upward of NZ$4bn for the "Mainland Group".</li>
<li>The ACCC previously commenced a formal review of Lactalis' proposed acquisition on the 2nd May, and on the 10th July, announced it would not oppose the deal.</li>
<li>There is potential for a further NZ$375mn increase from the inclusion of the Bega licences held by Fonterra’s Australian business - once a legal dispute is resolved.</li>
</ul>



Fonterra Co-Operative Group (FCG NZ) has agreed to sell its consumer and associated businesses to Lactalis for NZ$3.845bn, in line with prior market valuations upward of NZ$4bn for the "Mainland Group".
The ACCC previously commenced a formal review of Lactalis' proposed acquisition on the 2nd May, and on the 10th July, announced it would not oppose the deal.
There is potential for a further NZ$375mn increase from the inclusion of the Bega licences held by Fonterra’s Australian business - once a legal dispute is resolved.


Fonterra (FCG NZ) Inks Spin-Off With Lactalis

<ul>
<li>We have a deal in <a href="https://www.smartkarma.com/entities/ntt-data-corp" target="_blank" data-smartkarma-citation="entities:11232:1" rel="noopener">NTT Data Corp (9613 JP)</a>. It's big, liquid, and a great place to hide for long-only investors who are bearish the market.</li>
<li>Li Shufu-backed <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> offers an ordinary 13.6% premium for 65.7-held <a href="https://www.smartkarma.com/entities/zeekr-intelligent-technology-holding" target="_blank" data-smartkarma-citation="entities:36785:1" rel="noopener">Zeekr (ZK US)</a>. Li/Geely have the necessary votes to force a privatisation.  But still might bump terms.</li>
<li>
<a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a> has now strongly overbid Minebea's weak overbid of Yageo's strong overbid of Minebea's weak overbid of Yageo's initial hostile offer for <a href="https://www.smartkarma.com/entities/shibaura-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:12704:1" rel="noopener">Shibaura Electronics (6957 JP)</a>.</li>
</ul>


We have a deal in NTT Data Corp (9613 JP). It's big, liquid, and a great place to hide for long-only investors who are bearish the market.
Li Shufu-backed Geely Auto (175 HK) offers an ordinary 13.6% premium for 65.7-held Zeekr (ZK US). Li/Geely have the necessary votes to force a privatisation.  But still might bump terms.

Yageo Corporation (2327 TT) has now strongly overbid Minebea's weak overbid of Yageo's strong overbid of Minebea's weak overbid of Yageo's initial hostile offer for Shibaura Electronics (6957 JP).


Last Week in Event SPACE: NTT Data Corp, Zeekr, Shibaura Electronics, Swire Pacific/ThaiNamthip

New Zealand

Fonterra Cooperative Group Ltd is a New Zealand multinational dairy co-operative and its farmer shareholders are the suppliers of milk to Fonterra in New Zealand. The Company operates Fonterra Shareholders' Fund, which provides additional financial flexibility for farmer shareholders who would have the opportunity to sell economic rights of shares to the fund.

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Fonterra Co-Operative Group (FCG NZ)

Primer: Fonterra Co-Operative Group (FCG NZ) - Aug 2026

Fonterra is pivoting its strategy to focus on high-value ingredients and foodservice channels, divesting from its consumer brands to streamline...

αSK Primers

NZX FY25 Preview—FUM Up, Volumes Down

We expect a result in the upper half of its guidance range (NZ$49m—NZ$54m), slightly ahead of NZX’s expectations from its 1H25 result

Forsyth Barr

Last Week In Event SPACE: Shibaura Electronics, Krungthai Card, Wilmar, First Pac, Fonterra

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Fonterra (FCG NZ) Inks Spin-Off With Lactalis

The sale is a win for Fonterra. Nevertheless, Fonterra's market cap has increased by NZ$5.4bn since the divestment was first floated. The sale...

David Blennerhassett

Last Week in Event SPACE: NTT Data Corp, Zeekr, Shibaura Electronics, Swire Pacific/ThaiNamthip

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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