Yes I thought that this was a very good interview, answered all questions imho. well done fish heads.
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“The a2 Milk Company (ATM) is changing its stripes. It has well-publicised strategic intentions to vertically integrate its supply chain, be it through M&A, organic investment at Mataura Valley Milk (MVM), or JVs/alliances. It's not a matter of if, it's a matter of when. Our detailed scenario analysis assesses how ATM would evolve should it purchase SynlaitMilk's (SML) Dunsandel asset. We acknowledge this isn't necessarily likely but we think it would prove to be an attractive asset for ATM, helping to reduce supply chain risks (mainly regulatory), capture manufacturing margin (albeit we don't think group margins will notably improve), and drive EPS growth ahead of current consensus forecasts. We have also explored the ramifications should ATM pursue other NZ manufacturing sites. Given current undemanding valuation multiples, investors appear cautious on the potential implications of such a large investment. Our analysis supports our OUTPERFORM rating, and we believe the market is too cautious on the potential capex investment implications” FB
20 years of a2 milk powder: one meter wide and ten thousand meters deep, leading the high-quality advancement of the milk powder market with strong innovation
Xiao Liu 2023-12-05 10:27 Views:587
Introduction: Looking at the entire dairy market, the A2 protein category has been born for more than 20 years, but the market education is relatively mature. The unique advantages of A2 protein "easy to digest and easy to absorb" have penetrated deeply among practitioners and consumers. A2 milk powder has become a popular track for dairy enterprises at home and abroad. It has also led to the rapid expansion of this market.
However, scientific research is an endless process. Thanks to the decades-long focus of scientists at home and abroad, the recent research on A2 protein has made significant progress again. A2 protein can not only improve the level of glutathione GSH, an antioxidant that is very important to the immune system, but also It can synergize with lactoferrin: lactoferrin can regulate glutathione GSH activity, thus providing better self-protection for infants and young children. Glutathione GSH can play an antioxidant role and participate in the detoxification process to help the human body maintain normal immune system function. And the latest research results have been transformed and applied by a2 milk company to the new product series of infant formula from a2 to early childhood.
A2 milk powder welcomes new opportunities for development. The new research has once again confirmed the gold content of A2 protein, and the whole industry has further seen the richer potential value and broad development prospects of the A2 category.
From niche to mainstream
The multiple benefits of A2 protein are constantly confirmed.
As an important source of nutrients for the human body, scientific research and product innovation on milk have never stopped. We can't help wondering how many secrets are hidden in a glass of milk? Especially about A2 protein, the high scientific research barriers in the early stage of category development have built the foundation for its high-end quality and unique nutritional value, and a2 company has been digging up the "nutritional gold mine" of A2 protein step by step and bringing its treasure to more people to meet different needs. Requirements.
Reviewing the relevant research and application of A2 protein, it can be roughly divided into three stages:
A coincidence inspired scientific research in the 1.0 era: a study originally published in the journal NATURE in the 1960s found that cows produce different types of beta-casein due to genetic variation, thus revealing the study of milk proteins.
Decades have been focusing on research from scientific discovery to product landing. It is the 2.0 era: from early principle research, cell experiments, animal experiments, and clinical experiments. After countless studies, it has been found that A2 protein has benefited to the human body, and it has been confirmed that milk containing only A2 protein and does not contain A1 is more prophilic milk. And the human body will significantly reduce the symptoms of gastrointestinal discomfort after drinking milk. For example, the Effects of Ordinary Milk and Milk Containing Only A2 β-casein on the Digestion of Chinese Children: A random study jointly completed by experts from China and Australia in 2019 shows that milk containing only A2 β-casein can reduce gastrointestinal symptoms caused by milk intolerance in preschool children in China, and can Improve its cognitive performance accordingly. Many experts and scholars at home and abroad have devoted themselves to the field of A2, and their research on different nationalities, different ages and different groups of people has made the A2 category significantly different from other subcategories, and their value attributes have laid the foundation of the category.
Breaking through the research margin and discovering the synergy with different high-quality nutrients means that the A2 category has entered the 3.0 era: with more and more brands entering the game, accelerating the promotion of A2 milk powder from the minority to the mainstream. On the whole, the industry's perception of A2 protein is still concentrated in intestinal health fields such as digestion and absorption. But in fact, scholars have paid attention many times in their research that milk containing only A2 protein and without A1 can double the level of glutathione GSH, a "self-protective factor" antioxidant, which is very important for human immunity, which undoubtedly adds another fire to the rapid development of the A2 category.
An exciting news is that the interpretation of the latest study "Effects of Infant Formulas Supplementing Lactoferrin on Respiratory Infection and Diarrhea in 2-3 Years Old" released at the 17th National Perinatal Medical Academic Conference (CSPM) of the Chinese Medical Association in 2023 shows that the intake of A2 beta-casein cattle Milk with excellent amount of lactoferrin can improve common acute respiratory infections and diarrhea problems, and reduce the course of acute upper respiratory tract infections and/or diarrhea by 23%.
From intestinal comfort to immune health
The latest research solves the mystery of "multiplying self-protection"
Immune health has long been the focus in the field of maternal and infant nutrition. Especially in the face of various viruses and frequent colds in autumn and winter, infants and young children, as susceptible people, need their own strong immunity to resist external challenges. Immunity is like an ordinary invisible "guardian god" that provides for the baby's health at every critical moment.
In the past, many people had a relatively simple understanding of the role of the human intestine. In fact, the intestine is not only an digestive and absorption organ, but also an important immune organ of the human body. Therefore, when scientists deeply studied A2 protein, they found that in addition to its easily perceived digestive and absorption benefits, there is a certain inevitability to improve the value of the powerful self-protective factor glutathione GSH.
In recent years, we have seen that in the field of innovation of infant powder products, the cross-combination of different high-quality nutrients has become a trend, but it is the first time in the industry to study and demonstrate the synergy between A2 protein and excellent lactoferrin. This new research not only provides a new solution for children's intestinal comfort and immune health, but is bound to lead a new wave of formula innovation. At this time, as a pioneer and leader in the field of A2 protein, the new trend of a2 company has naturally become the focus of industry attention.
It is reported that during this year's Expo, a new series of infant formula was released. This series applies the latest research and empirically proves that it only contains A2 protein milk, which has a synergistic effect with an excellent amount of lactoferrin, and plays a 1+1>2 effect in helping babies improve their self-protection. At the same time, as a blockbuster work of a2 company to open a new decade in the Chinese market, this new series is a top-grade in nutritional formula, milk source and other aspects, with a ferritin purity higher than 95%, compared with 450% upgrade of the previous generation a2 to initial product content, which has attracted great attention from the market as soon as it is launched. The product advantages of a2 to the new product "good absorption and self-protection" have also become a new standard for feeding selection for young families of the new generation, and have also set a benchmark for the industry to match A2 protein milk powder.
It can be seen that in the development of A2 category, a2 milk company not only has the forward-looking ability to lead scientific research, but also has the comprehensive strength to transform scientific research achievements and user needs into innovative products.
First, focus and innovation
Lead the A2 category to a broader future
A glimpse of the development history of the entire A2 category is the evolutionary history of the milk powder market. No matter how the external environment and user needs change, scientific research ability has always been the endogenous driving force for the development of the industry. Since 2023, the new national standard racing competition and brand breakthrough competition have also focused the focus of industry competition on scientific research and innovation.
Up to now, A2 protein has become synonymous with high-end and quality, and the layout of A2 milk powder has also become the standard configuration of leading dairy companies. Everyone collects firewood and the flame is high, and the competition in the whole A2 milk powder market has also entered a higher latitude. Looking forward to the future, why can a2 company always be in the leading position?
First, first: At first, a group of scientists engaged in A2 beta-casein research established a2 milk company and was committed to discovering and promoting the benefits of A2 protein for the human body. Globally, a2 was the first to carry out A2 protein science research, and it was also the first to launch the first A2 protein product. The two "firsts" laid the strength of a2's "looking insight + scientific research gene + transformation and landing" from the beginning.
Second, focus: As the only company in the world that only produces A2 protein dairy products, and the industry that has been focusing on A2 protein research for more than 20 years, the professional value, product matrix and user mind in the field of A2 protein are beyond the right, which determines that the enterprise is difficult to be surpassed. For example, in order to obtain milk powder containing only A2 protein, it is necessary to master the patented A2 gene detection technology, and before 2017, a2 milk company was the only dairy company with this technology. For example, although many dairy companies are currently laying out A2 milk powder, in the minds of channel merchants and consumers, as long as they mention A2 milk powder, many people think of a2 at the first time. The brand is synonymous with the category.
Third, innovation: around the continuous broadening of the research margin of A2 protein, a2 continues to increase research on empirical evidence and product iteration. The ultimate product way has always been the biggest core competition barrier of a2, and the strong scientific research endogenous force also provides a continuous impetus for continuous innovation.
Back to the beginning of the birth of the A2 category, a2 is not a unique way to create demand, but a real insight into the underlying logic of user needs: finding and solving problems.
The launch of new research and new products is also a line of "discovering and solving problems", aiming at the strong needs of maternal and infant families to improve the digestive absorption and immune health of infants, and providing more scientific research support and more accurate solutions. In this process, it also provides a new high-quality advancement for the milk powder industry.
http://www.myguancha.com/post/22812.html
A mild positive to start 2024 for ATM :
https://www.reuters.com/world/asia-p...er-2024-01-01/
New Zealand said on Monday all its dairy products were now able to enter China duty-free as safeguard duties on milk powder ended on Dec. 31, marking the removal of all remaining tariffs agreed upon in the free trade deal between the two countries.
"This is good news for our dairy sector. The removal of these remaining tariffs is expected to deliver additional annual tariff savings of approximately NZ$350 million ($221 million)," Trade Minister Todd McClay said in a statement.
OUTPERFORM
The a2 Milk Company (ATM) is changing its stripes. It has well-publicised strategic intentions to vertically integrate its supply chain, be it through M&A, organic investment at Mataura Valley Milk (MVM), or JVs/alliances. It's not a matter of if, it's a matter of when. Our detailed scenario analysis assesses how ATM would evolve should it purchase SynlaitMilk's (SML) Dunsandel asset. We acknowledge this isn't necessarily likely but we think it would prove to be an attractive asset for ATM, helping to reduce supply chain risks (mainly regulatory), capture manufacturing margin (albeit we don't think group margins will notably improve), and drive EPS growth ahead of current consensus forecasts. We have also explored the ramifications should ATM pursue other NZ manufacturing sites. Given current undemanding valuation multiples, investors appear cautious on the potential implications of such a large investment. Our analysis supports our OUTPERFORM rating, and we believe the market is too cautious on the potential capex investment implications.
ATM will vertically integrate its supply chain in time — there are numerous options
One of ATM's five strategic pillars is to ‘transform its supply chain’ with the desire to: (1) expand China Label (CL) registered market access, (2) utilise MVM and invest in NZ capability, and (3) develop China supply capability. As part of all five pillars, it has stated it will, ‘explore opportunities to accelerate strategy execution through M&A, JVs, and alliances’. The key quantitative targets related to its supply chain are access to at least three CL registrations and an expanded English Label (EL) IF portfolio. The key attraction is wider access to CL licenses; this makes sense to us as the company seeks to improve its competitive positioning over the long term, and reduce future regulatory supply chain risks. ATM has numerous viable options, including: (1) SML Dunsandel, (2) Bodco's blending & canning site, (3) other NZ based IF manufacturers (notably Yili or Yashili), (4) expedite MVM investment, and/or (5) invest in China.
A compelling option is to acquire SML's Dunsandel asset. We are not suggesting this is likely, but it does offer attractive qualities to ATM, particularly the all important regulatory licenses. We don't have a firm view on value but would expect a purchase price >NZ$400m. Our base case scenario suggests FY25 EPS accretion of ~+35% to +40% (fully cash funded), ROIC decline to ~16% (from ~17% in FY23), and a reduction in net cash balance to ~NZ$415m (from ~NZ$720m at FY23).
Valuation is relatively attractive; the market appears overly nervous on the capex implications
We have previously argued ATM's earnings multiple has been too high, particularly given the fundamental change in growth and returns as it morphs into a conventional consumer staples company. ATM is now trading on a 12 month forward PE of ~17x (~14x cash adjusted) and EV/EBIT of ~10x, ~-40% below its respective five year average multiples. It is now trading in-line with similar consumer staples peers on a PE basis and ~-20% EV/EBIT discount (both at record lows on a relative basis). We are now comfortable: (1) the step-change in ATM's business is being appropriately reflected in its share price, and (2) see relative valuation as attractive, particularly given our constructive view on medium-term growth (FY26 to FY23 EPS CAGR of ~+10%).
FB
China’s population falls by 2.08 million to 1.4097 billion in 2023 as births tumble, adding to demographic concerns
- China’s overall population fell by 2.08 million last year to 1.4097 billion, down from 1.4118 billion in 2022, while births declined by 5.6 per cent to 9.02 million in 2023
- The world’s second-largest economy is under pressure as its population declines and gets older
https://www.scmp.com/economy/economi...aphic-concerns
A2 up on news they are selling on Amazon USA today. FYI, Bubs is selling circa $705k usd of products a week(54% on Amazon). Good timing from a2 management with Bubs inventory depleted due to wc issues. Although small sums for a company of a2’s size, can fast track US profitability with current drag.
Also, marriage data looking positive for 24. A leading indicator of births
Attachment 14911
Attachment 14912
https://www.linkedin.com/posts/thea2...ium=member_ios