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Australian Investment Blog

ASX:A2M 11/09/2018

Mother’s milk knows best (ASX:A2M)

Stock

a2 Milk Co. (ASX:A2M) $11.00 as at 11/09/2018

Event

A2 Milk (ASX:A2M) reaffirmed guidance in their investor presentation for the CLSA investor forum in Hong Kong released to the market today. The stock has bounced 3.84% as a result – broadly in line with other growth stocks (Bellamy’s up 3.4%), but also assisted by the details within the presentation. A2 noted they had achieved 10% market share of the milk market, and over 30% in the domestic infant formula market. The company also noted key milestones had been reached in terms of Asian penetration, while also earning an agreement with Costco who join Walmart in stocking a2 Milk in the US. All in all, not a great deal of new detail, but further justification of the strategy and execution of the a2 Milk team. A2 Milk (A2M) Chart

Market Matters Take/Outlook

While we remain negative most growth companies, a2 trades on a reasonable multiple, justified by its growing  Asian business, the Americas and Europe. Despite many headwinds to consumer facing products ahead, we like a2 milks ability to grow sales through market share to more than offset any headwinds the consumer market may face.

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