a2 Milk has kept its guidance intact for revenue in the first-half to be $725-$77m along with an FY21 revenue of $1.80-$1.90bn.
Nevertheless, UBS believes risks to be skewed to the downside, especially when noting the uncertainty around the improvement in the daigou channel in the second half.
The first half of the year was challenging due to the soft demand for ANZ infant formula sales via daigou channels. UBS notes the corporate daigou channel, supported by a new incentive programme, shows some early signs of improvement.
While the company’s cross-border e-commerce (CBEC) market share remains near record levels, the broker believes there is limited demand shift from the daigou channels.
Buy rating and NZ$20.50 target retained.
Sector: Food, Beverage & Tobacco.
Current Price is $13.98. Target price not assessed.