Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– A2 Milk- A2CompanyMilkLtdCompany(A2M.AX) Ltd (A2M.AX)

Some short term earnings uncertainty offset by long term opportunity

PRICE TARGET A$8.90 OVERWEIGHT THESIS

50/50 10-year DCF-based valuation (A$8.6/shr) and EV/EBITDA multiple on FY29e earnings ▪Transformed business through Pokeno

discounted to present day (A$9.1/shr). WACC 8.5% based on 9.8% cost of equity, 3.6% cost manufacturing gives A2M access to

of debt, 20% target debt weight. We use an EV/EBITDA multiple of 18x, broadly in line with additional China Label licenses and vertical

peers on growth adjusted basis. We derive our valuation in NZD, as earnings are reported in manufacturing margin.

NZD, and convert to AUD with exchange rate A$1=NZ$1.21. ▪Ongoing low birth rates in China now well

known, major industry consolidation likely A$7.99

sees a more stable pricing environment.

Consensus Price Target Distribution A$5.90 A$9.32 China Label licenses underpin MS PT ▪Additional

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates medium- to longer-term share gains.

▪Upside risk to China segment from faster-

than-expected Pokeno ramp up.

▪OW-rated on LT growth opportunity from

RISK REWARD CHART expanded product portfolio and stabilizing

market dynamics.

A$9.50A$9.50(+34.37%)A$9.50(+34.37%)(+34.37%)

AUD

A$8.90A$8.90(+25.88%)A$8.90(+25.88%)(+25.88%) Consensus Rating Distribution

8 67% Overweight

A$7.07A$7.07A$7.07 33% Equal-weight

0% Underweight

MS Rating

A$5.80A$5.80(-17.96%)A$5.80(-17.96%)(-17.96%)

Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

2 Self-help: Positive

View descriptions of Risk Rewards Themes here

JUL '25 JAN '26 JUL '26 JUL '27

Key: Historical Stock Performance Current Stock Price Price Target