ATM - A2 Milk Corporation Limited

[stoploss]

I don't quite understand why a grey trade exists at all. If there is demand in China, why do A2 not export direct?

The perversity is the average Chinese punter doesn't trust the product sold locally . ( history of melamine ) so happy to pay more than double for one with a receipt from woolies in Aussie , with the label all in English .

[see weed]

Wow what a ride.Tried to get some at 1.41, but by time I put order in it was back to 1.48-1.50 now it's on 1.61. This is better than Rainbows end.Ended up getting some at 1.48 to 1.50.

[Ginger_steps_]

Wow what a ride.Tried to get some at 1.41, but by time I put order in it was back to 1.48-1.50 now it's on 1.62. This is better than Rainbows end.Ended up getting some at 1.48 to 1.50.

Yep - i first logged in to see $1.41 - thought SHIZA, digested it and managed to pick up a parcel at $1.51 - only committed 30% of available cash - should have used it all!

[couta1]

Wow what a ride.Tried to get some at 1.41, but by time I put order in it was back to 1.48-1.50 now it's on 1.62. This is better than Rainbows end.Ended up getting some at 1.48 to 1.50.

Yep while the Air coaster has sort of lost momentum the A2 coaster has plenty of thrills left for those jumping on board.

[Ginger_steps_]

The Chinese formula market is not a western market, so western "normality" simply doesn't apply.

China will happily cut off their nose to spite their face, if there is a net gain in it for China.

China has stated a goal of reducing imported infant formula brand numbers from north of 300 to well below 50. And they are already moving along that path

It does this by constant regulatory creep and import uncertainty.

Grey-trade out of NZ was hit by this 2 years back, when MPI kow-tow'ed to Chinese authorities and effectively stopped the practice

It is only a matter of time before Aussie grey-trade is snuffed out as well, either by AQIS, or by the enforcement of regulations that require grey-trade imported formula to meet relevant Chinese national standards

And with about 75% of "Aussie A2 formula sales" in fact being grey-trade, I see a huge problem for both A2 and Synlait when the gate closes

Kind of like playing Russian roulette - everything is fine until the loaded chamber comes around

like everyone else, I have no idea when this will happen

Of course if these guys sign a deal with a2 in some shape or form, it may negate the risk from the grey channel all together.

http://www.smh.com.au/business/chine...02-gok0qy.html

[nextbigthing]

Of course if these guys sign a deal with a2 in some shape or form, it may negate the risk from the grey channel all together.

http://www.smh.com.au/business/chine...02-gok0qy.html

They're sneaky. Legislate against the product, destroy the shareprice then launch a takeover offer at a 'very generous' $1.5 after smashing it down sub $1*


*Pure fearmongering

[xafalcon]

Of course if these guys sign a deal with a2 in some shape or form, it may negate the risk from the grey channel all together.

http://www.smh.com.au/business/chine...02-gok0qy.html

Nope

As A2 doesn't have their own manufacturing plant, the 3-brand rule as it's currently written will potentially eliminate legitimate access into China

[mondograss]

Unless Synlait agree to A2 being one of the three brands it produces? It reads to me that it's more aimed at preventing manufacturers creating multiple brands to flood the market. A2 only appears to have the one brand so I would have thought it would be OK, certainly their comments publicly thus far have indicated that they're across this change and are well prepared.

[Golfer01]

I don't quite understand why a grey trade exists at all. If there is demand in China, why do A2 not export direct?

They do. Their appointed agent is CHINA STATE FARM HOLDING SHANGHAI CO.
IMHO - if the grey channel freezes then the volume currently going to Ozzie and HKG (ultimately to china) will go direct. Also I can't see the product being any more expensive to the consumer if sent direct. Certainly the cost to getting it to market is no more than the cost to Ozzie or HKG.

[xafalcon]

The number of brands relates to the product manufacturer, not the brand owner.

So Synlait can only send 3 brands into China under current wording

Synlait can choose to have A2 Platinum as one of their 3 brands, but that only leaves Synlait 2 other brands they can send into China

Synlait's own mainstream brand in China is Pure Canterbury, leaving them 1 other brand

Akarola is a direct marketed Synlait brand in China, leaving no other brands available for them

These are just the brands I know about, there may be others

Now think about Synlait ownership. Bright Dairy, a large Chinese dairy company is a major shareholder. Shanghai Pengxin is the owner of Synlait Farms. What if either of these companies want a formula brand for China made at THEIR Synlait plant in NZ?

And then consider that Synlait has just spent over $100M on expansion to become a major third party formula manufacturer. What happens if they win the business of a major multi-national who wants to send product into China?

Finally consider what other NZ formula manufacturers are in the A2 milk catchment region AND have spare IF capacity AND have China manufacturing approval AND have unused brand entry

Sounds like a big risk to me