A2M Competition Update

A2 Milk Competition Update:

• A big player enters A2 Milk’s main market with a directly competing product.
• China is a large market with lots of opportunities for growth.
• Is there room for more fish in this pond?

At the end of March international food group Nestle announced it will launch an “A2 beta casein” infant formula product in China. This caused a sharp decline in A2 Milk’s share price on NZX from $13.84 on 27^th of March down to $11.60, eventually closing up $12.97 on 6^th of April.

The China market is essential for A2 Milk. It is believed to be the key driver for the future sales growth of the infant formula supported by fresh milk and milk powder. A2 Platinum infant formula accounts to 78% of all A2 Milk revenue ($434,7m) for 1H18.

There are several main points why A2 Milk is likely to continue outperforming in China regardless of the increased competition: A2M Analyst Update