A2M 2.20% $5.77 the a2 milk company limited

I am a shareholder of A2M since 2017 with a small position and...

  1. 6 Posts.
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    I am a shareholder of A2M since 2017 with a small position and have never done really intensive DD on it. What I learned is that their latest half year report was well received by the market due to positive revenue-surprises. I had a quick look into the report and it doesn't look bad imo. Profitability in relation to invested capital (taking into account the huge cash-pile) does look good. But what concerns me is whether their suppy is secured. I learned that the majority of the supply for Infant milk is outsourced to Synlait - a company A2M is a 20 % shareholder of. They paid approx 280 m AUD for their stake Synlait seems to be in serious financial problems and insolvency is a concern. A2M did huge write-offs in their books on the Synlait-stake which lead to a charge of around 30 m AUD in the HY-report to write down the Syanlait-asset to appro 40 m AUD. I also learned that they aquired a 75% stake in a milk-supply-company called Mataura to bring supplies inhouse. my question is:

    1. Will Mataura be able to supply the Infant milk-segment or parts of it ?
    2. What happens when Synlait goes out of business - will A2M run out of supplies ?

    Good profitability does not help if A2M loses the necessary supplies. I walked through their 2023 yearly report but didn't find any valuable information regarding this. 150 pages ob blabla and no word on this - imo - most interesting questions. Can anyone help me ?
 
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Last
$5.77
Change
-0.130(2.20%)
Mkt cap ! $4.171B
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$5.87 $5.91 $5.77 $8.457M 1.452M

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No. Vol. Price($)
4 12297 $5.77
 

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Price($) Vol. No.
$5.82 7000 1
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