Media Updates, page-10654

From live wire

Jun Bei's pick: A2 Milk Company (ASX: A2M)

Jun Bei Liu: Absolutely. A2 Milk is our name. I know it's a tough name and it has certainly polarised the market.

James Marlay: I think it's competing with AGL for one of the worst five performing stocks of the year.

Jun Bei Liu: You can't go wrong with infant formula. A2 is a name we liked many years ago. It's got a great brand and it has established distribution channels into Asia. And it's got a business in the US and Australia market. It's got a good market position. Now, during the pandemic, they've been hurt by pantry stocking. The mothers in China, when the pandemic first hit, bought all the inventory possible. And now, it's taking 12 to 18 months to really clear those inventories. And they're putting pressure on price and volume. But the good thing is that the company doesn't have any debt. It's sitting with close to $600 million of cash.

It's still got a great brand and we're seeing green shoots in some of its distribution channels. Things are looking better and we just had a couple of those online events, like Singles Day, and the data from those are looking pretty positive. Pricing is up and volumes are good. Green shoots are looking promising and it's clearly much cheaper than what it was. And the share price is still pretty much at an all-time low. My view is that it's going to really recover in the next 12 months.