Finally about time!
Hopefully when the announcement comes out tomorrow,it will throw more light on the duration of the license/registration etc,
Printable View
It does: SAMR approves re-registration of a2MC's China label IMF - NZX, New Zealand’s Exchange
"SAMR’s approval will allow Synlait to manufacture 至初® for a2MC until September 20271" This should make Market happy!
Did A2 destroy Bubs China business or is the China IF market completely stuffed
Bulbs sales to China hardly anything at the moment …..there’s just too much stock in warehouses over there…..5 years worth
From Bubs the other day -
As previously reported, there remains a significant amount of inventory held in trade, predominantly Bubs Supreme. This product was developed for AZ Global and Alice for exclusive distribution into China. Bubs Australia understands there is more than 5 years of Bubs Supreme finished goods inventory held in multiple warehouses, based on the current rate of sale.
birth rate still trending down in China; 6.77 for every 1,000 people, down from 10.41 in 2019
https://www.ft.com/content/541008b7-...d-3e4a9d34c198
might be a market wide problem. but A2 is surely better than Bubs? so maybe not too bad eh.
it does not matter if the birth rate is down. In 2022, around 9.56 million babies were born in China. The number of births has decreased gradually from 17.86 million in 2016.
That number is already more than NZ population. That is only for newborn. What about the year 1 to year 5? One has to understand why A2 milk failed badly. It is all due to covid. Australian closed their door and the Chinese students went home. A2 rely on the Chinese students to sell on the daigou market. The Chinese students were earning big bucks before the covid lockdown.
So far, there are 40,000 China students in Australia and it is set to grow in Australia. There are Chinese students coming to New Zealand as well. That will be another daigou channel.
Do you think the company, A2 milk, is not tempted to use those students again? A2 milk is different from honey. There are so many types of honey in the world, however, there is only one A2 milk.
The challenge both the buyer/seller faced is that we kept hearing horrible news about China. Nothing good comes out from China until Chris Hipkins recent trips.
A2 is playing the long game and I believe their sales will grow.
Nice PR line - but I hope you realize that this is absolute non-sense? There are so many different milk sorts around, and even A2 milk can be sold by any Tom, Dick & Harry.
ATM might have A2 in their name, but it is not even trademarked. Its similar to Genesis Energy. They have the "Energy" in their name, but everybody is allowed to produce and sell the same stuff as they please. No advantage for them as well.
Anybody can hold A2 cow herds and sell their output as A2 milk .... and everybody does. As well, most of the milk sold from other animals (like sheep, goat) is A2 anyway.
A2 is just one milk protein which neither ATM nor anybody else holds IP for - it is just naturally occurring.
Yes, 9.56M still a huge number; but it will be all relative and based on a percentage market share vs competitors. Ultimately, there is now almost half as many babies (~customers) to sell too (in total) than there used to be. market is forward looking as well; so as this continues to trend down (and get worse), the market will likely take this into account. This will also have a flow-on effect to years 1-5 (so will be prolonged pain). totally agree with your thoughts around the daigou sales channel though; which has also had a huge impact.
Also it’s worth noting that in terms of competition… companies competing in this reduced market is also reducing. Abbots left with about 4% market share. The Chinese food regulation is very tough these days.Of about 200 applications towards SAMR only about two dozen would be approved (read somewhere must be NZ herald). It’s a tough market out in China and A2 is one of those very few companies which actually grew its market share.
Well, sure - Covid was the trigger for last times failure. However - Covid only could trigger the failure because management lacked quite basic management skills and the board was so deep asleep (or probably worse - drunk from the hype pushing the SP into the stratosphere), that they didn't bother to ask the most basic questions like - do we understand and manage our most important sales channel?
You need to understand whether you are investing into a lottery (which might bring some returns as long as Fortuna is smiling), or whether you invest into a professionally managed company with a board which identifies risks and problems before the earnings went already over the cliff.
Covid did show us that ATM's management and oversight is (well, used to be) substandard. Sure - Covid seems to be behind us (or we learned to live with the fatality rate), but what makes you believe that ATM is these days run by a better board and management?
Clearly a high risk investment, and not sure whether the potential returns are sufficient likely to compensate for the risks.