Macquarie provides an update on a2 Milk Co ahead of the FY22 earnings report.
In response to estimated input cost increases of 20-30% in the last year, a2 Milk Co has increased the recommended retail price by 7-13%, notes Macquarie, and repackaged the English Label which is expected to assist with sales and distribution for the China market.
Falling births in China, down -30% since 2019, are anticipated to have a lagged effect on the infant formula market.
Macquarie highlights the ongoing risks to earnings from competition, falling demand from lower birth rates and considers the stock to be fully valued around 26x FY23 earnings.
The Underperform rating is retained and the target price is $4.
(20min delay)