Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– A2 Milk- A2CompanyMilkLtdCompany(ATM.NZ) Ltd (ATM.NZ)

Some short term earnings uncertainty offset by long term opportunity

PRICE TARGET NZ$10.80 OVERWEIGHT THESIS

50/50 10-year DCF-based valuation (NZ$10.4/shr) and EV/EBITDA multiple on FY29e ▪Transformed business through Pokeno

earnings discounted to present day (NZ$11.1/shr). WACC 8.5% based on 9.8% cost of equity, manufacturing gives A2M access to

3.6% cost of debt, 20% target debt weight. We use an EV/EBITDA multiple of 18x, broadly in additional China Label licenses and vertical

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

reported in 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 NZ$9.65

sees a more stable pricing environment.

Consensus Price Target Distribution NZ$8.98 NZ$10.90 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.

NZ$11.50NZ$11.50(+35.77%)NZ$11.50(+35.77%)(+35.77%)

NZD

Consensus Rating Distribution

NZ$10.80NZ$10.80(+27.51%)NZ$10.80(+27.51%)(+27.51%)

10 67% Overweight

NZ$8.47NZ$8.47NZ$8.47 33% Equal-weight

0% Underweight

7.5

MS Rating

NZ$7.00NZ$7.00(-17.36%)NZ$7.00(-17.36%)(-17.36%) Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

2.5 Self-help: Positive

View descriptions of Risk Rewards Themes here

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