ASX:A2M
A2 Milk Company Ltd
Investment Summary
The fund managers believe that A2 Milk Company Ltd (A2M) is well-positioned for continued growth, supported by a strong balance sheet and positive market developments. In their opinion, the company’s performance has been bolstered by successful product launches, including the premium genesis product, and its ongoing consolidation in the Chinese market. A2M's market share has remained strong, and despite challenges in the infant formula sector, the company achieved an impressive 10% growth. With a robust $1 billion cash balance and more flexible supplier contracts, the fund managers see significant optionality for both capital returns and EPS-accretive investments. They are particularly optimistic about A2M's ability to capitalize on favorable demographic trends in China, including new financial incentives for families to boost birth rates, which could further support demand for its products. The fund managers have strategically increased their position in A2M, confident that the company’s strong market performance and potential for capital returns will continue to drive shareholder value. They continue to monitor macroeconomic developments in China closely, recognizing their potential to influence the company’s growth trajectory.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
Ten Cap
Date
31 Jan 2025
Price
$5.90
Medium
Monthly Report
Commentary
Alpha Plus has updated its investment thesis on a2 Milk Company Ltd (A2M), increasing its position over the month as confidence in the company’s trading performance grew. The fund manager was encouraged by positive feedback surrounding the launch of A2M’s new premium Genesis product, alongside continued consolidation in the Chinese market—factors seen as supportive of the company’s growth outlook. Alpha Plus also highlights A2M’s strong $1 billion cash balance and improved supplier contract flexibility, which provide strategic optionality. These conditions, in their view, open the door for potential capital returns as well as earnings-per-share-accretive investments. Alpha Plus continues to hold the stock based on this evolving and constructive investment case.
Ten Cap
Date
28 Feb 2025
Price
$7.98
Medium
Monthly Report
Commentary
Alpha Plus has updated its investment thesis in A2 Milk Company Ltd (A2M), reflecting increased confidence in the company's strategic direction and recent performance. The fund manager strategically increased its position in A2M ahead of the reporting season, citing encouraging market share data, the success of recent product launches, and positive birth trend indicators in China. While the broader infant formula market remains challenging, Alpha Plus notes that A2M delivered a robust 10% growth, which reinforces their constructive outlook. The firm continues to hold A2M based on its potential for value-enhancing supply chain investments and the prospect of capital returns to shareholders.
Ten Cap
Date
31 Mar 2025
Price
$7.93
Medium
Monthly Report
Commentary
Alpha Plus has updated its investment thesis on The a2 Milk Company Ltd (A2M), continuing to hold the position based on several supportive developments. The company has maintained positive momentum, underpinned by strong market share data and the successful launch of new products. Additionally, Alpha Plus highlights favorable demographic trends in China, including recent policy measures such as financial incentives for families in Hohhot, aimed at encouraging higher birth rates. While the long-term impact of these initiatives remains to be seen, Alpha Plus views them as an important signal of ongoing fiscal support that could benefit demand in key markets for A2M. Given these dynamics, the fund maintains its position in A2M, monitoring demographic and policy shifts in China closely as part of its ongoing investment assessment.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.