China sales of the formula are expected to be significantly down in the first half compared with the same period last year, and English label sales are also likely to be down but ahead of expectations. The company has set a target of growing sales to more than $2 billion within five years, from the preset $1.2b.
Greg Smith, head of retail for Devon Funds Management, said the a2 Milk update left a sour note with investors. They were expecting that the China daigou sales channel had recovered.
"But it wasn't all doom and gloom. The company is showing it is happy to be adaptable and agile. It has a good brand and while the Chinese market has become increasingly competitive, it is looking elsewhere and developing new products and markets," Smith said.
In its presentation, a2 Milk said it has formed a partnership with Hershey for a new chocolate brand; it has launched Half and Half (real milk and cream) into 5000 stores so far; it has introduced UHT a2 Milk in Australia; and it has expanded into the South Korean market.
Synlait Milk, whose biggest customer is a2 Milk, fell 11c or 2.97 per cent to $3.59. Smith said Synlait was down in sympathy with a2 Milk, and it is looking to diversify and reduce its reliance on a2 Milk.
Rubberware manufacturer Skellerup Holdings, a quiet achiever with global distribution, rose 15c or 2.56 per cent to $6 after telling shareholders at its annual meeting that it had made a strong start to the 2022 financial year. Skellerup said simply that its net profit for the first half will be more than 10 per cent ahead of the same period last year.
Chorus, which also held its annual meeting, increased 9c to $6.32. The telecommunications infrastructure provider said fibre connections have just passed 900,000 and on track to achieve the ambitious goal of one million connections by the end of the year.
Fisher and Paykel Healthcare was up 33c to $30.94; Pushpay Holdings increased 5c or 2.78 per cent to $1.84; Seeka gained 18c or 3.49 per cent to $5.34; Sky Network Television was up 4c or 2.17 per cent to $1.88; and Vista Group jumped 9c or 3.61 per cent to $2.58.
Tourism Holdings picked up 8c or 2.97 per cent to $2.77; Scott Technology rose 6c or 1.9 per cent to $3.21; Marsden Maritime Holdings increased 15c or 2.34 per cent to $6.55; and PGG Wrightson was up 21c or 4.9 per cent to $4.50.
Meridian, up 6 to $5.03, questioned the Electricity Authority's view that prices would have been lower if the Tiwai Pt aluminium smelter had closed this year. Meridian said most residential customers are on fixed-term plans that shield them from the volatility of the wholesale market.
Mainfreight fell a further $1.11 to $87.50 on profit-taking; Ebos Group decreased 40c to $35.45; Restaurant Brands was down 28c or 1.82 per cent to $15.11; South Port New Zealand declined 23c or 2.42 per cent to $9.27; and Solution Dynamics shed 6c or 2.04 per cent to $2.88.
Scales Corporation was down 13c or 2.39 per cent to $5.31; Serko shed 17c or 2.14 per cent to $7.77; and Kathmandu Holdings declined 4c or 2.45 per cent to $1.59.
Meal kit company My Food Bag continued its slide, falling 3c or 2.48 per cent to a new low of $1.18. Medicinal cannabis firm Greenfern Industries fell 6c or 18.75 per cent to 26c, close to last week's listing price of 25c.
Move Logistics went into a trading halt after announcing a plan to raise $40m through a shareholder renounceable entitlement offer of one new share for every 3.06 shares held, at a price of $.40. Move last traded at $1.62.
