New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Refined FY23 guidance (higher revenue but lower margins) implies low double digit EBITDA growth in FY23 versus FY22 which is consistent with our prior expectations and modestly below consensus</li><li>ATM also reaffirmed prior commentary that it anticipates SAMR re-registration approval in 2H23 and will transition to its new product in 1H24</li><li>We leave our forecasts unchanged and in light of ATM's downgraded margin expectations</li></ul>

Refined FY23 guidance (higher revenue but lower margins) implies low double digit EBITDA growth in FY23 versus FY22 which is consistent with our prior expectations and modestly below consensusATM also reaffirmed prior commentary that it anticipates SAMR re-registration approval in 2H23 and will transition to its new product in 1H24We leave our forecasts unchanged and in light of ATM's downgraded margin expectations

<ul><li>The a2 Milk Company (ATM) has refined its FY23 guidance.</li><li>Revised guidance is for “low double digit” revenue growth (prior guidance of “high single digit”) and EBITDA margins to be “similar to the prior year” (prior guidance of “modest improvement”)</li><li>The revised guidance primarily reflects currency impacts (positive to revenue but negative to costs)</li></ul>

The a2 Milk Company (ATM) has refined its FY23 guidance.Revised guidance is for “low double digit” revenue growth (prior guidance of “high single digit”) and EBITDA margins to be “similar to the prior year” (prior guidance of “modest improvement”)The revised guidance primarily reflects currency impacts (positive to revenue but negative to costs)

The A2 Milk Company (ATM): AGM Guidance Update

<ul><li>The American Dream remains alive. The a2 Milk Company (ATM) has received FDA clearance to sell Stage 1 and 2 a2 Platinum Infant Formula (IF) as part of the FDA's enforcement discretion to fill its shortage</li><li>Medium-term market presence is reliant on further FDA approval(s)</li><li>Assuming ongoing approval, we estimate a base case valuation benefit of ~+NZ15–20cps</li></ul>

The American Dream remains alive. The a2 Milk Company (ATM) has received FDA clearance to sell Stage 1 and 2 a2 Platinum Infant Formula (IF) as part of the FDA's enforcement discretion to fill its shortageMedium-term market presence is reliant on further FDA approval(s)Assuming ongoing approval, we estimate a base case valuation benefit of ~+NZ15–20cps

The A2 Milk Company: American Dream Is Still Alive

<ul><li>ATM expects it to be incrementally beneficial: ATM has received confirmation to sell and distribute a2 Platinum Stage 1 and 2 IF product as part of the enforcement discretion</li><li>Valuation benefit: Assuming approval can be granted medium-term which is still to be confirmed</li><li>State of the market now – product shortage is largely over</li></ul>

ATM expects it to be incrementally beneficial: ATM has received confirmation to sell and distribute a2 Platinum Stage 1 and 2 IF product as part of the enforcement discretionValuation benefit: Assuming approval can be granted medium-term which is still to be confirmedState of the market now – product shortage is largely over

The A2 Milk Company: US FDA Clearance – The American Dream?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ex US ETF / Technical Analysis

<ul>
<li>Many major indexes have broken below critical supports, including MSCI ACWI (ACWI-US), EURO STOXX 50, STOXX Europe 600, and the DAX.</li>
<li>Odds suggest a bearish downside continuation, and a bearish outlook is appropriate as long as the YTD downtrend remains intact on the ACWI-US, MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).</li>
<li>There is bounce potential given these broad global indexes are testing their respective downtrend channel supports, but the fact remains that they <em>are</em> in downtrends, a major problem longer-term.</li>
</ul>


Many major indexes have broken below critical supports, including MSCI ACWI (ACWI-US), EURO STOXX 50, STOXX Europe 600, and the DAX.
Odds suggest a bearish downside continuation, and a bearish outlook is appropriate as long as the YTD downtrend remains intact on the ACWI-US, MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
There is bounce potential given these broad global indexes are testing their respective downtrend channel supports, but the fact remains that they are in downtrends, a major problem longer-term.


MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports -- Bounce Potential

Australia

a2 Milk Company Limited produces cow milk which is free of a protein called beta casein A1.  The Company 
offers its products in Australia and New Zealand.

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A2 Milk Co Ltd (A2M AU)

The A2 Milk Company: Crawling Forward

The a2 Milk Company's (ATM) AGM update had little surprises - refined FY23 guidance (higher revenue but lower margins) implies low double digit...

Forsyth Barr

The A2 Milk Company (ATM): AGM Guidance Update

The a2 Milk Company (ATM) has refined its FY23 guidance; revised guidance is for “low double digit” revenue growth (prior guidance of “high single...

Forsyth Barr

The A2 Milk Company: American Dream Is Still Alive

The a2 Milk Company (ATM) has received FDA clearance to sell Stage 1 and 2 a2 Platinum Infant Formula (IF) as part of the FDA's enforcement...

Forsyth Barr

The A2 Milk Company: US FDA Clearance – The American Dream?

This morning the FDA has reported The a2 Milk Company (ATM) has finally been granted approval to sell Infant Formula (IF) into the US; ATM’s...

Forsyth Barr

MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports -- Bounce Potential

Bounce potential given $ACWX $EFA testing downtrend channel supports, but it would likely be a short-term trading opportunity due to the fact that...

Vermilion Research

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