A2M shares skyrocket

A2M shares skyrocket

February 21, 2018 0 By incomem

Today was a good day to be a shareholder of A2M (a2 Milk Company Limited) which saw a 29.74% gain on the ASX (Australian Stock Exchange). I’ve held A2M shares since mid-2017 and currently sitting on a profit of 51%!!!

A2M has seen consistent gains over the last few years while they have focused strongly on tapping into international markets beyond just Australia and New Zealand.

The reason for today’s big leap was the announcement of A2M joining forces with another big dairy producer, Fonterra, in the ASX market Release. This joint-venture includes benefits such as access to large-scale manufacturing performance and producing a new A1 protein-free milk product line.

I’m a big believer in holding shares and low-cost index funds that pay dividends but A2M are my only exception, and who could argue when you look at their track record.


Source: Commsec

A2 Milk released some really strong figures and a promising outlook for 2018.

FY18 Outlook

  • Expecting marketing investment in 2H18 to exceed 1H18 by ~NZ$35-$40 million, driven by increased spend in China and USA.
  • Subject to currency movements and realisation of throughput efficiencies, GM% expected to be broadly consistent in 2H18
  • Inventory levels have improved during 1H18; forecasting further build in 2H18

1H18 Trading Performance

  • Group Revenue of NZ$434.7 million
  • Group EBITDA of NZ$143 million

A2 Milk has received amazing success in the Chinese markets with the demand for baby formula that is produced in New Zealand and Australia being viewed as a superior product compared to other products that are in the market.

China and Asia regions

  • Distribution in China Mother Baby Stores (MBS) now totalling approximately 6,700 stores
  • a2 Platinum infant formula launched in Hong Kong through approximately 350 high-end pharmacy outlets.
  • Extensive video billboard campaigns launched in Hong Kong

Australia and New Zealand

  • Australian market value share of a2 Platinum infant formula grew from 25% to 30%
  • a2 Milk named top brand of choice for Australian millennials (survey results from The Urban List, Food & Drink, May 2017)
  • a2 Milk is still the fastest growing infant formula brand by value in Australia