A2 Milk (ASX:A2M) share price lifts on China child policy change

An increase from two to three in China’s child policy pushed infant formula shares higher today.
The post A2 Milk (ASX:A2M) share price lifts on China child policy change appeared first on The Motley Fool Australia. –

It’s shaping up to be a positive day for the A2 Milk Company Ltd (ASX: A2M) share price following a shift in China’s child policy.

At the time of writing, the milk and infant formula company’s shares are trading 2.54% higher to $5.66.

China upgrades the infant formula market potential

The A2 Milk share price is not alone in today’s rejuvenated optimism. Other infant formula makers are enjoying some green on the back of China’s government revising its policy limiting couples to two children.

China will now support couples to have a third child, according to a meeting of the Political Bureau held on Monday. The policy change is in response to China’s aging population, with people aged over 60 accounting for 18.7% of the country’s population in 2020.

Obviously, an increase in the fertility rate for what was already considered to be the biggest growth engine for infant formula producers pre-COVID bodes well for associated companies.

Today’s reaction is a little déjà vu. Back in late 2015, China increased its child policy from one to two. Shares in publicly traded infant formula companies received a boost following the change.

Interestingly, smaller players like Bubs Australia Ltd (ASX: BUB) have done particularly well out of the news. The Bubs share price surged over 20% following the development.

Doesn’t break the A2 Milk share price drought

Much like one good downpour of rain, the gains from today doesn’t dispel the months of losses.

COVID-induced demand waning has forced A2 Milk and others to downgrade its FY21 guidance. The last month was no exception, with the A2 Milk share price souring by 23%.

Unfortunately for shareholders, the company’s full-year revenue estimate is now NZ$1.2 billion to NZ$1.25 billion. Earnings before interest, tax, depreciation, and amortisation (EBITDA) suffered the same fate – lowered to between NZ$132 million to NZ$150 million.

Even with today’s gain, the A2 Milk share price 71.7% down from its all-time high of $20.05 a share. As they say, “When it rains it pours” – shareholders would be hoping the same applies for positive news.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

Leading brokers name 3 ASX shares to sell today

Why a2 Milk, Fortescue, Infomedia, & Talga shares are pushing higher

ASX 200 down 0.5%: A2 Milk rises, Woolworths completes Quantium transaction

Why the a2 Milk (ASX:A2M) share price crashed 23% in May
3 reasons why the A2 Milk (ASX:A2M) share price could still be a buy

The post A2 Milk (ASX:A2M) share price lifts on China child policy change appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!