July17 online sales data, page-23

BELLPOTTER SECURITES

2018 Guidance: A2M expects to report growth in FY18e particularly in infant formula
and milk powders in Australia and China.
Following the result we have upgraded our NPAT forecasts by 14% in FY18e and 18%
in FY19e. Our target price has lifted to $5.51ps (prev. $4.22ps) reflecting earnings
changes, as well as a move to isolate US losses from our ROIC based target price.
Three swing factors for FY18-19e
Major drivers of value we see over FY18-19e for A2M include: (1) growth rates in
China IMF demand in 2H18e post brand consolidation; (2) the level of traction A2M
can achieve in adult nutrition products, where we estimate A2M holds a modest 3%
supermarket share; and (3) a reduction in US losses.
Investment view: Retain Buy rating
A2M continues to achieve strong levels of earnings growth while generating high levels
of operating cash realisation. Looking forward we see the scope for any sign of
success in the US & UK fresh dairy markets, the potential launch of IMF products in
the UK & US and an acceleration in demand for adult nutrition products as levers to​

create further value for shareholders. We retain our Buy rating target $5.51