ATM, FCG, SML- 3 stocks in the spotlight as global dairy prices drop

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ATM, FCG, SML- 3 stocks in the spotlight as global dairy prices drop

 ATM, FCG, SML- 3 stocks in the spotlight as global dairy prices drop
Image source: © Draghicich | Megapixl.com

Highlights

  • The GDT price index fell 1.3% with the average price reaching US$4600/MT.
  • Fonterra’s global ingredients and solutions brand, NZMP, has recently launched Pro-Optima, which is a Grade A whey protein concentrate.
  • ATM remains focused on taking initiatives that will help in its growth.

 

Dairy prices witnessed a marginal decline in the latest Global Dairy Trade (GDT) price auction held on 21 June. Dairy prices had risen 1.5% in the previous auction held 2 weeks ago, the first increase after 5 consecutive drops since 1 March.

The GDT price index fell 1.3% with the average price reaching US$4600/MT with 20,760MT of product sold. Whole milk powder fell 0.6% to $4,125, butter prices rose 2.4% to $6,123 and skim milk powder increased 1% to $4,276.

Amid this backdrop, let’s see how these 3 NZX dairy stocks are doing.

Source: © Tenkende | Megapixl.com

 

The a2 Milk Company Limited (NZX:ATMASX:A2M)

Infant nutrition company the a2 Milk’s interim results remained in line with its expectations. The Company faced challenging market conditions in H1 FY22 due to a drop in the China infant milk formula (IMF) market and external factors.

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ATM expects higher revenue in H2 FY22 and growth in FY22 due to growth in the China label and English label IMF. The Company expects capital expenditure to be $15 million-18 million in H2 FY22.

ATM has a well-defined growth plan. It remains focused on taking initiatives that will help in its growth.

On 22 June, at the time of writing, ATM was trading at $4.63, down 2.73%.

 

Synlait Milk Limited (NZX:SMLASX:SM1)

Dairy processing firm Synlait has set the opening forecast price for the 2022/23 season at $9 per kgMS. The Group has lowered the forecast milk price from $9.6 per kgMS earlier to $9.3 per kgMS for the 2021/22 season.

ALSO READ: ATM, FCG: 2 NZX dairy stocks in news as GDT index jumps 1.5%

The Group expects the 2022/23 season final milk price to be contingent on the global situation. This expectation comes even if some products have been sold at record high prices and forex movements are encouraging a strong milk price.

SML will verify its final milk price for the 2021/22 season at the time of the release of FY22 results, due in September.

On 22 June, at the time of writing, SML was trading at $3.24, up 1.25%.

 

Fonterra Co-operative Group Limited (NZX:FCG)

Dairy co-operative Fonterra’s global ingredients and solutions brand, NZMP, has recently launched Pro-Optima, which is a Grade A whey protein concentrate. It has entered into a JV with global ingredients and solutions brand, Tillamook County Creamery Association, and Three Mile Canyon Farms, in the US to launch the product.

RELATED READ: ATM, FCG, SML: How are these dairy stocks faring at NZX?

Fonterra has estimated farmgate milk price to be $9.10-$9.50 per kgMS for the 2021/22 season and a mid-point of $9.3. The opening forecast farmgate milk price has been set at $8.25-$9.75 per kgMS by the firm for the 2022/23 season.

On 8 June, the Group announced that it would allocate up to $50 million to the share buyback program, which will start on 30 June 2022.

On 22 June, at the time of writing, FCG was trading flat at $2.7.

 

Bottom Line

The NZ government’s report has pointed out that the dairy sector is expected to be worth over $21 billion in 2022 and might be $24 billion by 2026.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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