ATM - A2 Milk Corporation Limited

[aperitif]

a2’s WeChat impressions have gone parabolic this week. Interesting times 14998

[Sideshow Bob]

Meantime, struggling to make much headway on Amazon......number 81 on the best seller list.

Bubs 2nd and 6th....

https://www.amazon.com/Best-Sellers-Baby-Toddler-Formula/zgbs/baby-products/16323121

[winner69]

A2 share price a bit weak today ….. getting tainted with problems at Synlait?

[Sideshow Bob]

https://www.nutraingredients-asia.com/Article/2024/04/15/major-infant-nutrition-brands-gaining-market-shares-in-china-despite-shrinking-birth-rates?utm_source=copyright&utm_medium=OnSite&utm_campaign=copyright

Growth in market share for A2 and other brands.

[aperitif]

15064

New products now on JD & Tmall

[aperitif]

http://www.myguancha.com/post/23399.html

[Sideshow Bob]

https://www.interest.co.nz/rural-news/127749/keith-woodford-reveals-rather-remarkable-transition-underway-where-a2-beta-casein?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+1 5+May+2024

Keith Woodford reveals a rather remarkable transition underway where A2 beta-casein milk from 2024-born calves will exceed 85%. He calls for a full-industry review of how we can benefit from the unique advantage that gives our dairy sector

[whatsup]

ATM, up and running ( again IMO ) !

[sb9]

It’s been very looooong time between drinks..

[Baa_Baa]

It’s been very looooong time between drinks..

Up over 80% since the Nov 23 low, snooze & lose. I thing there has been so much negative sentiment on ATM for such a long time, people have taken their eye off the ball, and miss the recovery ... even if it turns out to just be a 'trade'.

[Sideshow Bob]

https://www.livewiremarkets.com/wires/why-a2-milk-is-back-in-flavour?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Thursday+23 +May+2024

[Bikeguy]

A2 seems to be gaining fairly steady now?

[Sideshow Bob]

A2 seems to be gaining fairly steady now?

Basically highest level since May 2021, when it was all unwinding.

Obviously market sees no Synlait/China IF issues.

[Bikeguy]

Basically highest level since May 2021, when it was all unwinding.

Obviously market sees no Synlait/China IF issues.

Yes, have to agree, market seems to know something? It’s been down for so long and there hasn’t been any really startling positive news has there?

[carrom74]

Expect some substantial holding notices soon. That will show us who is buying..(Hopefully not Citi nor Goldman sachs)

[Bikeguy]

Expect some substantial holding notices soon. That will show us who is buying..(Hopefully not Citi nor Goldman sachs)

Are they big shorters?

[carrom74]

Are they big shorters?
Yup- pump n dump brigade- GS for sure

[Sideshow Bob]

https://www.shortman.com.au/top

Only 33rd on the ASX.

[Newman]

Basically highest level since May 2021, when it was all unwinding.

Obviously market sees no Synlait/China IF issues.

What if Synlait goes into receivership, its plant that produces A2 infant formula is sold to someone else, and A2M does not have sufficient IF cans to sell to China?

[Baa_Baa]

What if Synlait goes into receivership, its plant that produces A2 infant formula is sold to someone else, and A2M does not have sufficient IF cans to sell to China?

Cue ‘Jaws’ music. Have a think about the massive vested interests of the two largest shareholders, then consider whether this is a realistic scenario.

[Bikeguy]

What if Synlait goes into receivership, its plant that produces A2 infant formula is sold to someone else, and A2M does not have sufficient IF cans to sell to China?

Yes, agreed, thats kind of why I’m surprised at the level of lift and consistency lately…

I just didn’t envisage this type of movement without the supply situation being suitably sorted…maybe it is?

Cards surely have to be turned over sooner rather than later….

[Mrbuyit]

Probably making more money from thier massive pile of cash ( its something like 800m isnt it?)than they are from selling milk powder?

[Bikeguy]

Probably making more money from thier massive pile of cash ( it’s something like 800m isnt it?)than they are from selling milk powder?

So true, must be making a mint at the moment with the high interest rates!!

[Baa_Baa]

Probably making more money from thier massive pile of cash ( its something like 800m isnt it?)than they are from selling milk powder?

At roughly 6% interest on $800m, the interest earned would be about 3% of sales revenue. So it would be far more sensible to deploy that capital into something productive

[Mrbuyit]

For sure the revenue number at ~800m blitzes the potential interest earnings, but i think total profit for last 6 months reporting period was something like 85M?

[Bikeguy]

At roughly 6% interest on $800m, the interest earned would be about 3% of sales revenue. So it would be far more sensible to deploy that capital into something productive

Like purchasing SML?

[sb9]

At this we could see sp in double digits veru soon. That’ll be some turnaround lead by DB, if it indeed happens.

[aperitif]

Data and trends

In the first quarter of 2024, maternal and infant consumption data were released, and online sales of milk powder increased by 10.6% year-on-year.Recently, Magic Mirror Insight officially released the White Paper on New Consumption Potential in the First Quarter of 2024 (hereinafter referred to as the White Paper). In the white paper, the consumption trends and data of maternal and infant categories in the first quarter are disclosed in detail. In the first quarter of 2024, the online sales of the infant milk powder market reached 10.6 billion yuan, with sales increasing by 10.6% year-on-year. At the same time, the online sales of the infant diaper market and the infant nutrition market also maintained a growth rate, and the online sales of infant nutrition products reached 2.7 billion yuan, a year-on-year increase of 16.5%.

http://myguancha.com/post/23510.html

[billkiapi]

Like purchasing SML?

That will change dynamics quite a bit. A2M is a business that has been built off contract manufacturing- essentially outsourcing capital risk of product plants, and outsourcing production and supply risks (fixed/variable cost issues). It's helped A2M amass a huge cash pile.

Buying SML makes a whole lot of vertical integration sense, but they'll quickly need to build production management talent in house. A well run production plant is a wonderful thing, but it's easy to have a badly run production plant which sucks cash out of the business.

[Bikeguy]

That will change dynamics quite a bit. A2M is a business that has been built off contract manufacturing- essentially outsourcing capital risk of product plants, and outsourcing production and supply risks (fixed/variable cost issues). It's helped A2M amass a huge cash pile.

Buying SML makes a whole lot of vertical integration sense, but they'll quickly need to build production management talent in house. A well run production plant is a wonderful thing, but it's easy to have a badly run production plant which sucks cash out of the business.

This is such an interesting situation, both parties effectively need to maintain relationships with each other going forward ?(Bright &A2)

[Newman]

This is such an interesting situation, both parties effectively need to maintain relationships with each other going forward ?(Bright &A2)

Without Bright Dairy, Synlait would not be able to renew its license to produce IF for exporting to China, and without the license, A2M would lose a large part of its business.

[Bikeguy]

Without Bright Dairy, Synlait would not be able to renew its license to produce IF for exporting to China, and without the license, A2M would lose a large part of its business.

I think the same, whatever happens it’s not in either parties interests to win the battle with to much blood on the floor…

[whatsup]

WHO is the big sella today OFF aprox 5% atm ? !!!

[carrom74]

Overbought and no news .. so was always expected to get a pull back .

[billkiapi]

Not sure a2 don't have insurance for that with Yashili (Mengniu) and China State Farms/Animal Husbandry. I think SML relied on the Bright effect and it has backfired.

[longy]

Does A2 needs Synlait's milk to gain access or to sell its products in China?

[Balance]

Does A2 needs Synlait's milk to gain access or to sell its products in China?

Synlait holds the SAMR for A2 to export its IF into China.

Without Synlait, A2 is toast until its gets its own SAMR access into China (unlikely imo).

[Newman]

Synlait holds the SAMR for A2 to export its IF into China.

Without Synlait, A2 is toast until its gets its own SAMR access into China (unlikely imo).

The SAMR only allows the export to China of the IF produced in the Dunsandel plant of Synlait. In my view, there is no possibility that 1) A2M could continue its business as usual without Synlait; 2) A2M does not participate in capital raising if Synlait decides to go ahead; 3) A2M votes against Bright Dairy’s loan to Synlait; 4) A2M starts dispute with Bright publically as it did with Synlait; 5) A2M deliberately pushes Synlait into receivership then buy the Dunsandel plant at a huge discount because Chinese mums would NOT buy IF produced by a company in receivership and according to Synlait Chairman, Dunsandel is too big for A2M to swallow.

I guess, Bright needs time to get approvals for new spending in New Zealand. Once done, big changes would happen at Synlait at light speed.

[Sideshow Bob]

Synlait holds the SAMR for A2 to export its IF into China.

Without Synlait, A2 is toast until its gets its own SAMR access into China (unlikely imo).

Market isn't considering this an issue. Synlait's problems have been long known, as the bust up with A2......but A2's share price is up 73% this year.....

[Bikeguy]

Market isn't considering this an issue. Synlait's problems have been long known, as the bust up with A2......but A2's share price is up 73% this year.....

It’s good to see A2 climbing amongst all the developments at SML isn’t it

[Balance]

It’s good to see A2 climbing amongst all the developments at SML isn’t it

Agreed. Our market needs more positivities and assurances that good stocks when properly managed do not stay down forever.

[longy]

Mataura Valley Milk factory in Southland that A2 owns with China Animal Husbandry Group. Does anybody know if China Animal Husbandry Group holds the Chinese regulatory licence? A2 has cancelled SML's exclusive right milk manufacturing back in 2023... I am thinking what is A2 up to eh?

[billkiapi]

MVM doesn’t have SAMR but Yashili does. Yashili already making some A2M product

[aperitif]

15149

a2 Organic released - 800g tub for sale on Tmall

[Newman]

15149

a2 Organic released - 800g tub for sale on Tmall

Chinese mums are more difficult to kid these days because of the slowing economy and vanishing adoration for foreign products.

[aperitif]

Junlebao released the clinical empirical results of China's first A2 milk powder
Recently, the clinical empirical release of Junlebao Zhizhen China's first A2 milk powder and the launch of the public welfare plan to help the bone growth of Chinese babies was held in Beijing. Yi Jianlian, the brand ambassador of Junlebao Zhizhen, also visited the scene in person. In order to further confirm the scientificity of the formula, Zhizhen Milk Powder and Professor Sheng Xiaoyang led the implementation of a three-year clinical feeding project for infants and young children to study the impact of Zhizhen formula on the growth and development, bone strength and gastrointestinal symptoms of infants and young children. The research results show that compared with the control group, babies fed with Zhizhen milk powder performed better in many aspects of growth and development indicators, bone strength and gastrointestinal indexes. ( Company release)

https://baijiahao.baidu.com/s?id=1801551521535202192&wfr=spider&for=pc

[aperitif]

Chinese mums are more difficult to kid these days because of the slowing economy and vanishing adoration for foreign products.

Yeah cool. https://www.farmersweekly.co.nz/markets/fonterra-brands-likely-to-be-heading-offshore/

[aperitif]

Global food companies from dairy producers to pork exporters are on high alert for potential retaliatory tariffs from China following the European Union's decision on Wednesday to impose anti-subsidy duties on Chinese-made EVs.

https://www.investing.com/news/stock-market-news/european-dairy-pork-producers-wary-of-chinese-retaliation-for-ev-tariffs-3482403 (https://www.investing.com/news/stock-market-news/european-dairy-pork-producers-wary-of-chinese-retaliation-for-ev-tariffs-3482403)

[Baa_Baa]

Global food companies from dairy producers to pork exporters are on high alert for potential retaliatory tariffs from China following the European Union's decision on Wednesday to impose anti-subsidy duties on Chinese-made EVs.

https://www.investing.com/news/stock-market-news/european-dairy-pork-producers-wary-of-chinese-retaliation-for-ev-tariffs-3482403 (https://www.investing.com/news/stock-market-news/european-dairy-pork-producers-wary-of-chinese-retaliation-for-ev-tariffs-3482403)

This has to be good for any country who has a free trade agreement with China, and no sanctions or tariffs on China EV imports. Like NZ, for example.

Not so good for the EU, or the US who are looking to shut out China's EV imports, and face potential retaliatory sanctions of things like Diary products, but that's their problem.

Upside for A2 Milk.

[aperitif]

Infant formula cooperation arrangement

Mr Hoggard has welcomed signing of a new cooperation arrangement for infant formula between China and New Zealand.

“This is a strong demonstration of the trust and confidence China has in New Zealand’s infant formula and food safety systems.”

https://www.scoop.co.nz/stories/PA2406/S00084/government-boosts-agriculture-and-food-trade-with-china.htm

[Bikeguy]

This is great news, thanks

[Balance]

This has to be good for any country who has a free trade agreement with China, and no sanctions or tariffs on China EV imports. Like NZ, for example.

Not so good for the EU, or the US who are looking to shut out China's EV imports, and face potential retaliatory sanctions of things like Diary products, but that's their problem.

Upside for A2 Milk.

As long as Luxon and gang do not fxxk it up by embracing & supporting the anti-China rhetoric enveloping the Western world.

[Bikeguy]

As long as Luxon and gang do not fxxk it up by embracing & supporting the anti-China rhetoric enveloping the Western world.

I agree, NZ needs to be smart and respect we don’t need to fight at the big boy table…

[Bikeguy]

Our media seem determined to make it hard during this visit though…

[Balance]

Our media seem determined to make it hard during this visit though…

But of course.

Same media squealing like pigs waiting in line to be slaughtered at the abattoirs - NZers just have to be careful not to fall into the same trap!

[Bikeguy]

But of course.

Same media squealing like pigs waiting in line to be slaughtered at the abattoirs - NZers just have to be careful not to fall into the same trap!

I will admit that after returning to NZ after working offshore for a number of years I have been disappointed to see how poor the journalism and reporting has become here…for me it has lost much of its substance and standard…
Only my opinion though.

[aperitif]

15152

JD rankings for 618, and recent article on Ecommerce for Nutrition Market" below

http://myguancha.com/post/23574.html

[whatsup]

I will admit that after returning to NZ after working offshore for a number of years I have been disappointed to see how poor the journalism and reporting has become here…for me it has lost much of its substance and standard…
Only my opinion though.

Its been " death by a thousand cuts for the last 15-20 years.

Amazing its only the right wing that buys newspapers now the left has been crushed by the over spending of the last govt and they cannot afford them, the journalists that are left are totally left wing and slowly but surely the subscribers ( right wingers ) that are left are cancelling their subscriptions daily.
The newspaper owners cannot understand why, their employees ( journalists ) are destroy their business and their jobs to boot, funny that !!

[Bikeguy]

Its been " death by a thousand cuts for the last 15-20 years.

Amazing its only the right wing that buys newspapers now the left has been crushed by the over spending of the last govt and they cannot afford them, the journalists that are left are totally left wing and slowly but surely the subscribers ( right wingers ) that are left are cancelling their subscriptions daily.
The newspaper owners cannot understand why, their employees ( journalists ) are destroy their business and their jobs to boot, funny that !!

I’m in total agreement on the over spending, fair point

[Nor]

Seems likely that the force feeding of Maori language on an unwilling public is a factor in failure of TV news to be viable anymore. But it keeps on coming.

[Charlie]

1 buyer wants 200,000 shares.
obviously thinks it is good value at 6.93

[whatsup]

If ones looks at the continued strength of ATM one cant help thinking that the SML situation isnt going to effect them ( ATM )_ greatly, am I wrong with this conclusion ?

[Bikeguy]

If ones looks at the continued strength of ATM one cant help thinking that the SML situation isnt going to effect them ( ATM )_ greatly, am I wrong with this conclusion ?

The SP has certainly climbed and with all the noise around SML I would have thought it would go the other way, so the market seems to be in agreement with you

[aperitif]

https://mp.weixin.qq.com/s/jE6tBISSdztco_sA-T1Rbw Timing lol

[Bikeguy]

https://mp.weixin.qq.com/s/jE6tBISSdztco_sA-T1Rbw Timing lol

What does it say?

[Baa_Baa]

What does it say?

Browser translation:

Frequently received "name-noun" praise from the ambassadors of the two countries, a2® helps China-Singapore economic and trade set off a new chapter.

Original Mothers and babies are watching.Observation of the maternal and infant industry 2024-07-02 02:52 Beijing

On the occasion of the 10th anniversary of President Xi Jinping's state visit to New Zealand and the establishment of a comprehensive strategic partnership between China and New Zealand, Premier Li Qiang began his official visit to New Zealand on June 13. This is also the first visit of China's Premier of the State Council in seven years, and its significance is self-evident. During the visit, Premier Li Qiang held cordial talks with representatives of New Zealand's business community. At the meeting, he mentioned that China's consumption upgrading will release new market demand, and the demand for New Zealand dairy products and other high-quality goods will continue to grow.

According to the data of the New Zealand Trade Development Agency, after the signing of the free trade agreement between China and New Zealand in 2008 and upgrading in 2022, the economic cooperation between the two countries continued to deepen. In 2023, New Zealand's total exports to mainland China was 17.9 billion New Zealand dollars (about 10.5 billion US dollars), of which dairy products accounted for 40%. Premier Li Qiang's visit has further improved the relationship between the two countries on the basis of the existing fruitful results. At the same time, it will also promote more and more New Zealand dairy companies to deepen the Chinese market to the strategic level of enterprises.
Among them, a2® milk company, which has close cooperation with central enterprises such as agricultural reclamation and zhong animal husbandry and has made great progress in the Chinese market, is not only an active promoter of the healthy economic and trade development of the two countries, but also an excellent model of Sino-Singare economic and trade cooperation.

On June 26, Wang Xiaolong, Chinese Ambassador to New Zealand, and He Ying, Chinese Consul General in Christchurch, and his entourage went to the Mataura Dairy Factory of a2® Milk Company in the South Island of New Zealand, David Potrosi, Global CEO of a2® Milk Company, member of the Party Committee of China Agricultural Reclamation Company and China Reclamation Shanghai Company. Chairman Zhao Qingyong and others accompanied the whole process enthusiastically.
During the visit, Ambassador Wang Xiaolong spoke highly of a2® milk company's excellent quality dairy products, innovative leading production processes, and continuous investment in sustainable development business model, and expressed appreciation for the cooperation between the two sides in the dairy industry and their achievements in China.

This is not the first time that a2® milk company has been praised by government officials of the two countries. At the 2023 Expo, Mao Rui, New Zealand's ambassador to China, said publicly: "The products of the a2® brand come from the Canterbury Plain of the South Island, which is located in the global golden milk source belt. I am very happy that a2® has brought dairy products from the beautiful South Island of New Zealand across the ocean to China."

Thanks to the significant leading advantage of high-quality A2 protein products and the long-term and stable investment in the Chinese market, a2® still shows strong growth resilience despite the background of shrinking the new population. According to the financial report of the first half of 2023-2024 released by the company, the share of a2® in the Chinese infant market has increased from 4.9% to 6.4%, and has become one of the most successful brands in the top five in the Chinese market.

Ambassador Wang Xiaolong said during the visit that the cooperation between Zhongken Shanghai Company and a2® Milk Company has become an excellent sample of Sino-Singapore economic and trade cooperation, bringing tangible benefits to the people of the two countries. It is hoped that the factory will continue to strengthen the monitoring of product quality, do a good job in food safety, and bring better products to Chinese consumers. At the same time, we also look forward to the continuous deepening of cooperation and exchanges between the two sides, promoting localized cooperation in China, continuing the model of economic and trade cooperation between China and New Zealand, and working together for the friendly diplomacy between China and New Zealand. Contribution.

Deeply received by the attention of the two governments and took the lead in completing the "growth against the trend". Many dazzling achievements made by a2® are not only due to the differentiated competitiveness built by enterprises' intensive cultivation of the A2 protein track, but also inseparable from the "follow the trend" in the context of the healthy development of China's new economy and trade. It is foreseeable that in the future, as an excellent model of Sino-Singapore cooperation, "born in Australia and New Zealand, prosperous in China", a2® milk company will continue to implement its growth strategy, focus, invest and layout China, and work closely with Chinese central enterprises and many business partners to provide Chinese and even global consumers with sourced from New Zealand. Pure, natural and healthy nutrition support.

[Bikeguy]

Thank you for the above, appreciated

[nztx]

Just when:

https://www.nzherald.co.nz/nz/gdt-dairy-prices-plummet-69-at-latest-auction/5YVBFFL6P5F7BIHWW4UPZXYLBE/

GDT: Dairy prices plummet 6.9% at latest auction

[Sideshow Bob]

Just when:

https://www.nzherald.co.nz/nz/gdt-dairy-prices-plummet-69-at-latest-auction/5YVBFFL6P5F7BIHWW4UPZXYLBE/

GDT: Dairy prices plummet 6.9% at latest auction

Probably a bigger impact for their mates at Dunsandel.

[Sideshow Bob]

Yes vote on Synlait, and ATM up another 2% today....

[Baa_Baa]

Yes vote on Synlait, and ATM up another 2% today....

Just over 90% up from the Nov'23 low, the SP popped again today above a very important, albeit steep upwards trend line that it broke down through in mid June, and has been retesting constantly since to the daily $1, smack on the trend line. Clearly with SML not going bust imminently and being the key supplier to ATM for the China market, it's encouraging to see ATM respond positively. Plenty of overhead resistance to SP here though, I expect a test of the $7.83 and $7.97 soon and see how that goes. A breakout above that brings $9.10 resistance into play, or $10.47 above that. If China IF supply is secured, I'd expect a bolter from ATM.

[Baa_Baa]

Just saying, the TA indicators have room to move to the upside, the basics RSI has +10 room to overbought and MACD has only just turned up a week ago. A turn usually runs for 1-2 months.

[sb9]

Haven’t seen 8 handle for a while, hopefully slow grind upwards to 10 from here on.

[X-men]

Article on nz herald....3 days ago...brokers are bullish about the result..19th august...$900m warchest cash!!

[Newman]

Article on nz herald....3 days ago...brokers are bullish about the result..19th august...$900m warchest cash!!

Would A2 milk decide before August 19 what to do in the expected capital raising of Synlait?

[X-men]

It said...atm can easily buy sml.. however might be a conflict of interest with bright..

Bright confident that sml will recover..

[Sideshow Bob]

https://www.nzx.com/announcements/436291

ynlait Milk Limited (Synlait) and The a2 Milk Company have conditionally agreed to resolve all disputes subject to arbitration, including those regarding exclusivity, pricing, and other issues.

Synlait CEO Grant Watson commented: “Settling these disputes is another positive step forward in our business recovery plan. With the disputes behind us, we are pleased to be able to confirm to our shareholders The a2 Milk Company’s support for our upcoming equity raise. This marks genuine progress for Synlait – we are delivering on the turnaround actions needed to reset our performance and better position the company for the future.”

A summary of the settlement is set out on the next page. However, notably:
- Synlait has agreed that the exclusivity it has under the Nutritional Powders Manufacturing and Supply Agreement (NPMSA) for a2 Platinum® and other nutritional products will cease to apply from 1 January 2025; however, Synlait expects to continue to produce all products under the NPMSA in the short term.

- Synlait will continue to hold the Chinese regulatory State Administration for Market Regulation (SAMR) registration (currently expiring September 2027), attached to its Dunsandel facility, after settlement takes effect. The registration is for The a2 Milk Company’s Chinese labelled 至初® Infant Formula (stages one, two and three). Despite the exclusive supply arrangements ending, Synlait expects that The a2 Milk Company’s China label products will continue to be produced at Synlait’s Dunsandel facility unless The a2 Milk Company can obtain its own SAMR registration to manufacture those products.

- Synlait will make available to The a2 Milk Company an additional SAMR registration slot at Dunsandel for a potential new China label registered product – The a2 Milk Company and Synlait will work together to develop the new product, prepare the SAMR registration dossier and seek registration from SAMR by December 2029.

- As part of the settlement, The a2 Milk Company will make a one-off payment to Synlait in the order of $24.75 million. That payment includes amounts that had largely been withheld in accordance with the terms of the NPMSA from payment pending resolution of matters in dispute. Although Synlait is receiving a payment and pricing on certain existing products manufactured for The a2 Milk Company will increase incrementally, the wider settlement arrangements mean that, when taken as a whole, the overall profitability of the products produced for The a2 Milk Company is expected to be moderately impacted due to additional costs and adjustments to manufacturing standards. Despite this, new business opportunities exist with The a2 Milk Company, in relation to potential long term US IMF market access and the development of an additional China label product subject to US Food and Drug Administration and SAMR approval respectively.

Settlement conditional on completion of Synlait’s deleveraging plan – major shareholders indicate support

The settlement is conditional on Synlait completing an equity raise and a refinancing of its existing banking facilities. Synlait is working to finalise the terms of the equity raise and the bank refinancing. Shareholders will have the opportunity to vote on these matters at a Special Shareholders’ Meeting.

Further information will be set out in the notice of meeting, which is expected to be released this month.

Provided the settlement conditions are satisfied, the arbitration to resolve the disputes will end. In the meantime, the arbitration hearing for exclusivity and other matters has been adjourned.

The a2 Milk Company has agreed to support and subscribe to an equity raise. As previously indicated, Bright Dairy fully supports Synlait raising equity capital, subject to terms being finalised, and all necessary approvals being received.

The a2 Milk Company Settlement Deed – Key Terms

Settlement payment from The a2 Milk Company to Synlait
- A one-off settlement payment from The a2 Milk Company to Synlait in the order of $24.75 million will be made.
- The payment includes amounts that had been withheld in accordance with the terms of the NPMSA from payment pending resolution of matters in dispute.
Exclusivity disputes
- The parties have agreed that The a2 Milk Company’s cancellation of its exclusivity obligation under the NPMSA by notice on 15 September 2023 is valid but that exclusivity will not end until 1 January 2025.
- The parties have agreed that Synlait’s commitments in the NPMSA to procure the supply of a minimum annual volume of product, and certain priority arrangements in favour of The a2 Milk Company, shall continue after the end of exclusivity on 1 January 2025.
- Synlait will make available to The a2 Milk Company an additional slot at Dunsandel for a potential new China Label registered product – The a2 Milk Company and Synlait will work together to develop the new product, prepare the SAMR registration dossier and seek registration from SAMR by December 2029.

The parties have agreed that:
- The a2 Milk Company owns the intellectual property rights for the product specifications of all finished products currently manufactured under the NPMSA; and
- The a2 Milk Company is free to manufacture, and/or procure the manufacture of the products utilising the product specifications.

Pricing disputes
- The parties have agreed to resolve the various pricing disputes between them as to the application of the controllable and non-controllable costs provisions in the NPMSA.

New products dispute
- The parties have agreed that the infant milk formula products developed for the United States market are products supplied under the NPMSA, with The a2 Milk Company contributing to certain Synlait development costs and US Food Drug and Administration registration costs.

Operational matters
- The parties have agreed that, going forward, Synlait will provide The a2 Milk Company with enhanced access to Synlait’s site, people and information relevant to Synlait’s supply to The a2 Milk Company in addition to adjustments to manufacturing standards.

[sb9]

No hard feelings within the family, all sorted and move on. More positive for A2 imo.

[Sideshow Bob]

No hard feelings within the family, all sorted and move on. More positive for A2 imo.

Market likes it - ATM now up 5% today

[Sideshow Bob]

Full Year Results Monday.....

[X-men]

Brokers are upbeat with the NPAT

[Sideshow Bob]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/436310/424904.pdf

Revenue up 5.2%, NPAT up
7.7%

[Bikeguy]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/436310/424904.pdf

Revenue up 5.2%, NPAT up
7.7%

Is this as good as everyone was hoping Sideshow?

[carrom74]

Still sitting on a pile of cash and no capital return. Expect a big fall today with some serious negative tone in the outlook statement especially for 1H25( they must be seeing the trends)

[winner69]

Is this as good as everyone was hoping Sideshow?

Pretty close to analyst forecasts (consensus)

[winner69]

MVM still a dog and drag on profit

Prob has a strategic benefit somewhere

[whatsup]

Still sitting on a pile of cash and no capital return. Expect a big fall today with some serious negative tone in the outlook statement especially for 1H25( they must be seeing the trends)

Carr, Why would the return any capital atm, with the way things have unrolled since Covid I would think that bthey will need all of the funds under their care , no I do not think this will cause a big fall today.

[whatsup]

Carr, Why would the return any capital atm, with the way things have unrolled since Covid I would think that bthey will need all of the funds under their care , no I do not think this will cause a big fall today.

WOW, how wrong was I opened down @ $7-00, down .73 and a 9.44% drop !!

[carrom74]

WOW, how wrong was I opened down @ $7-00, down .73 and a 9.44% drop !!

This is just the teaser … wait till ASX opens. It’s going to be bloodbath

[Patrick11]

Disappointing result.

[sunnysleeper11]

Brokers are upbeat with the NPAT
are brokers now beat up?

[winner69]

This is just the teaser … wait till ASX opens. It’s going to be bloodbath

ASX could put it right …might see this a good announcement

[Bikeguy]

ASX could put it right …might see this a good announcement

Yes, it’s hard to see how being so close to the excepted result could bring about this reaction? I know they haven’t said a BB or dividend or such but the money hasn’t gone anywhere lol?

[Bikeguy]

Seems like an over reaction to me, I guess the ASX will decide…

[Balance]

Strip out the net interest income of $14.25m from the result and ATM's underlying result is hardly impressive - almost zero growth in earnings!

Strip out the cash of $900m from market cap and ATM is trading on a pretty ritzy multiple of 24 times for a stock with single digit earnings growth.

Cannot see the appeal of investing or owning this stock at current levels.

[winner69]

Seems like an over reaction to me, I guess the ASX will decide…

Went as low as $5.34

[whatsup]

A2m opened DOWN 22+% in Aust, muck me !!

[winner69]

Bargain hunters out in force on ASX ….cant believe the over reaction

[flyinglizard]

buying point at A2M, unbelievable bargain. target on 10% a day

[winner69]

Appears that David the CEO got paid A$6.0m in F24....with another A$1.0m of LTI earned to be paid in future

He not complaining about being low growth

[bull....]

smart cookies should have sold at resistance just under 8 been resistance 5 times in last 3 - 4yrs.

[sb9]

Hmmm...bit of an average result, sideways movement until another catalyst or ASM time in Nov.

[winner69]

Share price down again today

Bear in mind that if it fell to $6.00 that’s still 50% above the recent low

That’s pretty good

[aperitif]

Synlait’s recapitalisation proposal includes a proposed equity raising of approximately NZ$217.8 million by way of a: • $185 million issue of new shares to Bright Dairy Holding Limited at an issue price of $0.60, which will increase its shareholding in Synlait from 39.01% to 65.25%; and • $32.8 million issue of new shares to a2MC at an issue price of $0.43, which will result in a2MC retaining its holding of 19.83%.

Another note, DB sounded disappointed with Synlait on the call with China Label supply constraints. Well this is a big **** you. Export data positive today on the English Label side(Higher margin) into HK.

[sb9]

Looks like Synlait overhang had bit to do with their supply chain issues. DB refused to go into detail around commercial sensitiveness on the call y’day.
That analyst from BoA, another David asked some probing questions as he always does.

[carrom74]

Looks like Synlait overhang had bit to do with their supply chain issues. DB refused to go into detail around commercial sensitiveness on the call y’day.
That analyst from BoA, another David asked some probing questions as he always does.

Synlait in its announcement- mentioned the supply chain issue briefly which the two David”s were muscle flexing over . It’s temporary and only until August.

[aperitif]

a2 and Abbott will buy Pokeno circa $300-400mm. It makes too much sense, this plant was built for a2's English label ramp up originally, Bodco BC facility(SAMR under Pharmalac) will get acquired too($50-60mm), do a "brand swap" and have a second China label in the market. Auckland facility will produce new EL and have supply from MVM. You have geographic diversification, a plant they know well, and a LARGE multinational(Abbott) who is ramping Soy/Hybrid powders, has recently pulled out of the China IF market and a massive presence in USA infant.

[aperitif]

China to probe European dairy imports as trade dispute escalates

https://edition.cnn.com/2024/08/21/business/china-eu-dairy-trade-tariffs/index.html

[aperitif]

More Notes:

Pro forma capital raise $310mm Debt
a2 and abbott buy to form a JV $300-400mm, Synlait debt free and shareholders happy.
Milk supply not an issue and advanced nutrition facility (have MVM supply) less favorable conditions in NI, fonterra also...
Purchase Bodco B&C facility circa $40-50mm with (SAMR license under Pharmalac brand) and do brand swap, close association with MVM(circa 5% stake)

Abbott - a2 have indirect product diversification through Abbotts plant based initiatives and the Pediasure brand which is ironically the same color(purple) and have massive ambition also in adult nutrition. NZ FTA agreement handy here. Not to mention the USA opportunity for IF and higher margin products. Im sure they must have been interested last year when Synlait were "exploring options", makes you think if Bortolussi has had a "chat" to Abbott's team...Pulled out of China IF market 2023, strategic stake in a2? Exploring M&A -chat in their previous call, cashed up.

[aperitif]

"Bodco (Hamilton): While this is just a blending and canning facility (it is these operations that hold a SAMR license), we find it interesting given its previous strong ties to MVM, and was previously supplied by MVM (we understand this isn't the case now). The founding shareholders of Bodco are also the founding shareholders of MVM and China Animal Husbandry group, a Chinese state-owned commercial enterprise that invested in Bodco in 2016 and is ATM's current partner at MVM. Bodco had a 5.6% initial share in MVM. ​​​​​​​Bodco was a loss making entity and had net debt in excess of PPE (& working capital) value at its last available accounts in 2021. It appears as if Bodco already at least has its Pharmalac brand holding one of the three CL brand slots. As of December 2021 PPE value was NZ$12.6m, total asset value of NZ$30m, and NTA ~-NZ$10m. A reasonable scenario in our view is ATM acquiring Bodco's Hamilton based blending and canning facility for potentially NZ$50m–$60m and insourcing production at MVM. While currently regulatory settings allow this, we do note that this may not be the most viable option long term, with potential regulatory settings changes whereby processing and blending & canning facilities are required to be integrated (this currently isn't the case). We understand that acquiring a ‘brand transfer’ from one site to another isn't easy, and there are significant risks associated with it. We note speed to CL access, along with ability to gain it, is also an important consideration for ATM"

[Newman]

India: Why the FSSAI has ordered removal of A1 and A2 claims from milk products
https://indianexpress.com/article/lifestyle/food-wine/fssai-a1-a2-milk-dairy-products-misleading-brands-directory-9528958/

[Newman]

https://www.afr.com/companies/manufacturing/a2-milk-soars-in-chinese-baby-formula-market-but-warns-of-soft-growth-20240813-p5k230

More immediately, a2 Milk chief executive David Bortolussi said the group faced higher freight costs to export into China after being caught short of available supply.

“The fourth quarter ended with less inventory than we would ideally like to have, and we’ve had some supply constraints from Synlait in July and August, which is being addressed now,” he said. “What has had a larger impact on us is the ability for Synlait to fulfil at the moment, which is impacting our stock availability, and will impact us for the next couple of months until we catch up our inventory levels in market.”

Mr Bortolussi said revenues this year would grow in the mid-single digits. This was lower than 9 per cent growth investors and brokers had been expecting.

[Sideshow Bob]

https://www.nzx.com/announcements/438881

New substantial holder

[bull....]

takeover ? up massively on no news

[winner69]

Bull ...I thought the news was all the new China stimulus....things going to go gangbusters

[alokdhir]

Bull ...I thought the news was all the new China stimulus....things going to go gangbusters

They also planning to make more babies ...how is the only problem !!!

[carrom74]

Trading Halt in ASX. NZX is still sleeping

[bull....]

here comes the takeover from bright lol

[Newman]

here comes the takeover from bright lol

Bright Dairy's business is struggling in China. However, China is said to have a stimulation of 10 trillion (ca. NZ$2 trillion).

[Lego_Man]

here comes the takeover from bright lol

It says "by us"

[Greekwatchdog]

Possible take over offer, let the games begin.

https://api.nzx.com/public/announcement/439048/attachment/428317/439048-428317.pdf

[alokdhir]

Possible take over offer, let the games begin.

https://api.nzx.com/public/announcement/439048/attachment/428317/439048-428317.pdf

Acquisition by ATM not ATM getting taken over I reckon ...????

[winner69]

Wonder who they acquiring?

[Balance]

Wonder who they acquiring?

Synlait’s Pokeno plant?

[winner69]

Synlait’s Pokeno plant?

I’d hope they don’t buy any more stainless steel ……marketing, not making stuff, is their forte

[bull....]

obviously plenty of people know already going by the price action

[alokdhir]

obviously plenty of people know already going by the price action

Thus the price enquiry by ASX ...while our beloved NZX looked the other way ...really funny they took so long to halt while ASX halt was in place ...ATM taking its time to respond to ASX ...keep doing like that they may get delisted from ASX ...its not boy's club like NZX ...I suppose

[steveb]

Fonterra were selling their consumer brands as per Anchor Mainland etc.This would be a good fit and would also benefit Synlait to boot

[Rawz]

Maybe buy that cheese brand from Synlait

[billkiapi]

Poss buy Yashili I guess

[sb9]

Wonder if there’s any goss in AFR re the acquisition..

[aperitif]

​​​​​​​Bodco (Hamilton): While this is just a blending and canning facility (it is these operations that hold a SAMR license), we find it interesting given its previous strong ties to MVM, and was previously supplied by MVM (we understand this isn't the case now). The founding shareholders of Bodco are also the founding shareholders of MVM and China Animal Husbandry group, a Chinese state-owned commercial enterprise that invested in Bodco in 2016 and is ATM's current partner at MVM. Bodco had a 5.6% initial share in MVM. ​​​​​​​Bodco was a loss making entity and had net debt in excess of PPE (& working capital) value at its last available accounts in 2021. It appears as if Bodco already at least has its Pharmalac brand holding one of the three CL brand slots. As of December 2021 PPE value was NZ$12.6m, total asset value of NZ$30m, and NTA ~-NZ$10m. A reasonable scenario in our view is ATM acquiring Bodco's Hamilton based blending and canning facility for potentially NZ$50m–$60m and insourcing production at MVM. While currently regulatory settings allow this, we do note that this may not be the most viable option long term, with potential regulatory settings changes whereby processing and blending & canning facilities are required to be integrated (this currently isn't the case). We understand that acquiring a ‘brand transfer’ from one site to another isn't easy, and there are significant risks associated with it. We note speed to CL access, along with ability to gain it, is also an important consideration for ATM.

[billkiapi]

Surely Bodco is too small to be useful to ATM

[Balance]

Surely Bodco is too small to be useful to ATM

And would not warrant a trading halt for such a small size acquisition.

[billkiapi]

And would not warrant a trading halt for such a small size acquisition.

That is very true

[winner69]

Well that was a non-event

Happy market with China stimulus pushed share price up …wow as if we didn’t know

And of course they in early stage discussions to acquire a manufacturer …who would have guessed

[kiora]

Another on the block soon?
https://businessdesk.co.nz/article/primary-sector/dairy-firm-in-the-spotlight-over-late-filing-of-accounts?utm_source=7am+Headlines+from+BusinessDes k&utm_campaign=7730f1729a-7am+Headlines&utm_medium=email&utm_term=0_617c2ef34a-7730f1729a-446239310

[Newman]

China Unveils Its Shock Plan To Revive The Economy
https://www.cointribune.com/en/world-china-unveils-its-shock-plan-to-revive-the-economy/

The share price of ATM is expected to rise this afternoon after the plan is unraveled.

[Patrick11]

The opposite the share price has gone down

[Sideshow Bob]

The opposite the share price has gone down

Well it went up and then went down......was up to $7.17 before trading as low as $6.80 and closing at $6.86.