The a2 Milk Co Ltd

ATM: XNZE (NZL)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	NZD 7.00	Xdszkw	Tlgcdtld

A2 Milk's Valuation Upside Remains With China Despite Falling Birth Rates

Angus Hewitt

Jul 1, 2022

The Chinese infant formula market remains the key driver of our unchanged NZD 8.00 fair value estimate for shares in a2 Milk Company. We reduce our fair value estimate for the ASX-listed securities to AUD 7.20, from AUD 7.60 previously, on currency-exchange fluctuations. We anticipate increasing premiumisation to offset the falling number of births in China, and expect a2 Milk can capture market share amid a declining market, supported by the strength of the a2 brand, which underpins the firm's narrow moat.

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