New Government Regulations Don’t Derail A2 Milk’s Growth Opportunity; Shares Fairly Valued
We don’t expect China’s proposed regulations to support its domestic infant formula market will damage the market-share opportunities we see for narrow-moat a2 Milk, and we maintain our NZD 14.50 (AUD 13.60) fair value estimate. However, the stock appears fully valued, and doesn’t offer a margin of safety to account for the potential risk of further government regulation or change in competitive dynamics.China’s National Development and Reform Commission, or NDRC, has outlined several planned m...
A2 Milk is principally engaged in the commercialization of a2 Milk™ related products as supported by the ownership of intellectual property that enables the identification of cattle for the production of a2 Milk™. Through its associated companies, Co. is also engaged in the distribution and marketing of a2 Milk™ in Australia and Japan and commercialize the sales and licensing rights for the supply, distribution and marketing of a2 Milk™ in the U.S. Co. products are also sold under the Jalna and Fresha Valley brand names. Co. operates predominantly in New Zealand and Australia.
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